VAM Managed Funds (Lux) Commentaries

June 2019 (click to download)

VAM DRIEHAUS FUND

As proxies for larger, broad equity exposures, note that the MSCI All Country World Index was up 6.55% and the S&P 500 was up 7.05% for the full month. On a relative basis, the VAM Driehaus Fund’s returns were aided by the outperformance of its global smaller cap growth exposures and hindered by its emerging markets exposures.

 

The economic and market environment continues to be consumed by monetary and trade policy. Both have arguably been weighing on economic conditions, which have in turn been headwinds for corporate earnings. Looking ahead, the outlook for equities should largely depend on how the market responds to the expected US rate cuts, whether the US and China can reach an actual trade deal that will put a huge uncertainty in the rearview mirror, whether US economic conditions can stabilise/improve as well as in China, Europe and elsewhere, and, as always, the strength of corporate earnings. Equity investors should continue to be prepared for equity market volatility, mindful of the uncertainties that persist around the globe.

VAM DISCRETIONARY FUNDS

VAM Cautious Fund

Equity investors shook off May’s concerns over the escalating trade war, and started to look forward to June’s federal reserve meeting and the anticipation of further monetary easing. Jerome Powell dropped the word “patient” from the latest statement, and signalled that the next move in interest rates is likely to be downwards and may come sooner than previously expected. Hopes for progress on US/China trade talks were also raised ahead of the G20 meeting with Presidents Trump and Jinping scheduled to meet in Osaka. In Europe, the political scene remains the centre of attention with leaders struggling to agree candidates for the EU top jobs whilst in the UK we now know that either Boris Johnson or Jeremy Hunt will replace Theresa May as Prime Minister. Equity markets rose around 6% in Sterling, reversing May’s losses and taking indices back to recent highs. Government bonds yields continued to decline, though not as dramatically as in May, and fixed income investors benefitted from a more relaxed market sentiment as credit spreads narrowed, resulting in returns from Sterling denominated corporate credit of around 2%.

 

In the last week of June, US pharmaceutical company AbbVie launched a takeover bid for Allergan, attracted by the strength of its brands, including Botox, but also some other durable premier brands in the aesthetics’ space. The bid consisted of USD 120.3 in cash and 0.866 shares of AbbVie which, at the time of the bid, equated to a value of $188 per share, and the Fund benefitted from the close to 40% move in the share price over the month. Against a backdrop of continued political noise and policy uncertainty, it is reassuring that corporates continue to focus on enhancing the value of their businesses.

VAM Balanced Fund

Equity investors shook off May’s concerns over the escalating trade war, and started to look forward to June’s federal reserve meeting and the anticipation of further monetary easing. Jerome Powell dropped the word “patient” from the latest statement, and signalled that the next move in interest rates is likely to be downwards and may come sooner than previously expected. Hopes for progress on US/China trade talks were also raised ahead of the G20 meeting with Presidents Trump and Jinping scheduled to meet in Osaka. In Europe, the political scene remains the centre of attention with leaders struggling to agree candidates for the EU top jobs whilst in the UK we now know that either Boris Johnson or Jeremy Hunt will replace Theresa May as Prime Minister. Equity markets rose around 6% in Sterling, reversing May’s losses and taking indices back to recent highs. Government bonds yields continued to decline, though not as dramatically as in May, and fixed income investors benefitted from a more relaxed market sentiment as credit spreads narrowed, resulting in returns from Sterling denominated corporate credit of around 2%.

 

In the last week of June, US pharmaceutical company AbbVie launched a takeover bid for Allergan, attracted by the strength of its brands, including Botox, but also some other durable premier brands in the aesthetics’ space. The bid consisted of USD 120.3 in cash and 0.866 shares of AbbVie which, at the time of the bid, equated to a value of $188 per share, and the Fund benefitted from the close to 40% move in the share price over the month. Against a backdrop of continued political noise and policy uncertainty, it is reassuring that corporates continue to focus on enhancing the value of their businesses.

VAM Growth Fund

Equity investors shook off May’s concerns over the escalating trade war, and started to look forward to June’s federal reserve meeting and the anticipation of further monetary easing. Jerome Powell dropped the word “patient” from the latest statement, and signalled that the next move in interest rates is likely to be downwards and may come sooner than previously expected. Hopes for progress on US/China trade talks were also raised ahead of the G20 meeting with Presidents Trump and Jinping scheduled to meet in Osaka. In Europe, the political scene remains the centre of attention with leaders struggling to agree candidates for the EU top jobs whilst in the UK we now know that either Boris Johnson or Jeremy Hunt will replace Theresa May as Prime Minister. Equity markets rose around 6% in Sterling, reversing May’s losses and taking indices back to recent highs. Government bonds yields continued to decline, though not as dramatically as in May, and fixed income investors benefitted from a more relaxed market sentiment as credit spreads narrowed, resulting in returns from Sterling denominated corporate credit of around 2%.

 

In the last week of June, US pharmaceutical company AbbVie launched a takeover bid for Allergan, attracted by the strength of its brands, including Botox, but also some other durable premier brands in the aesthetics’ space. The bid consisted of USD 120.3 in cash and 0.866 shares of AbbVie which, at the time of the bid, equated to a value of $188 per share, and the Fund benefitted from the close to 40% move in the share price over the month. Against a backdrop of continued political noise and policy uncertainty, it is reassuring that corporates continue to focus on enhancing the value of their businesses.

Sources: Driehaus Capital Management LLC and Sanlam Private Wealth.
Sanlam Private Wealth is a trading name of Sanlam Private Investments (UK) Ltd.

 

Disclaimer

VAM Driehaus, VAM Cautious, Balanced and Growth Funds are compartments of VAM Managed Funds (Lux).

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