VAM Managed Funds (Lux) Commentaries

September 2019 (click to download)

VAM DRIEHAUS FUND

As proxies for larger, broad equity exposures, note that the MSCI All Country World Index was up 2.10% and the S&P 500 was up 1.87%. On a relative basis, the VAM Driehaus Fund’s returns were hindered by its exposures to growth and price momentum factors, most notably within the US smaller capitalisation sector. More specifically, a significant style rotation from growth-oriented equities towards value and cyclical-oriented equities occurred that hindered the Fund’s relative and absolute performance.

 

Early September brought modest improvements in macroeconomic data and new optimism over the upcoming October US-China trade talks. This surprised market participants because the prevailing market sentiment in August was that the US economy may be headed towards recession. This change serves as further evidence that macroeconomic factors are inherently difficult to predict and that equity investors should be prepared for market risks associated with investing in equities, including the global, growth and momentum-oriented strategies employed by the Fund’s underlying investments.

VAM DISCRETIONARY FUNDS

VAM Cautious Fund

September saw equity markets recover some of August’s pull-back with the UK equity market, in particular, playing catch up, rising 3% compared to global equities which rose around 1%. Softening fears over trade wars, expectations of additional stimulus and a rate cut by the Federal Reserve helped bolster spirits. Global politics continue to dominate the headlines with Prime Minister Johnson and President Trump battling on all sides. Legal cases, impeachment, trade wars and a potential (much needed) snap election presents what appears to be a tough backdrop. However, markets looked past all of this with the background noise becoming business as usual for markets.

 

Bond markets saw yields move back towards the lows as expectations for lower-for-longer interest rates increased. UK government bonds returned 0.5% as yields fell, while credit was mixed with investment grade falling around 0.5% while high yield credit returned 0.5%.

 

We remain in an environment where slowing economic growth and pressure on margins make it tougher for companies to deliver on earnings expectations and the Manager continues to put great emphasis on selecting stocks that can execute their business plan regardless of the economic uncertainty. As we move towards the Brexit deadline, the Manager is preparing to take advantage of any short-term volatility or disruption, and if the opportunity presents, the Manager will increase its investments in strong businesses that can deliver.

VAM Balanced Fund

September saw equity markets recover some of August’s pull-back with the UK equity market, in particular, playing catch up, rising 3% compared to global equities which rose around 1%. Softening fears over trade wars, expectations of additional stimulus and a rate cut by the Federal Reserve helped bolster spirits. Global politics continue to dominate the headlines with Prime Minister Johnson and President Trump battling on all sides. Legal cases, impeachment, trade wars and a potential (much needed) snap election presents what appears to be a tough backdrop. However, markets looked past all of this with the background noise becoming business as usual for markets.

 

Bond markets saw yields move back towards the lows as expectations for lower-for-longer interest rates increased. UK government bonds returned 0.5% as yields fell, while credit was mixed with investment grade falling around 0.5% while high yield credit returned 0.5%.

 

We remain in an environment where slowing economic growth and pressure on margins make it tougher for companies to deliver on earnings expectations and the Manager continues to put great emphasis on selecting stocks that can execute their business plan regardless of the economic uncertainty. As we move towards the Brexit deadline, the Manager is preparing to take advantage of any short-term volatility or disruption, and if the opportunity presents, the Manager will increase its investments in strong businesses that can deliver.

VAM Growth Fund

September saw equity markets recover some of August’s pull-back with the UK equity market, in particular, playing catch up, rising 3% compared to global equities which rose around 1%. Softening fears over trade wars, expectations of additional stimulus and a rate cut by the Federal Reserve helped bolster spirits. Global politics continue to dominate the headlines with Prime Minister Johnson and President Trump battling on all sides. Legal cases, impeachment, trade wars and a potential (much needed) snap election presents what appears to be a tough backdrop. However, markets looked past all of this with the background noise becoming business as usual for markets.

 

Bond markets saw yields move back towards the lows as expectations for lower-for-longer interest rates increased. UK government bonds returned 0.5% as yields fell, while credit was mixed with investment grade falling around 0.5% while high yield credit returned 0.5%.

 

We remain in an environment where slowing economic growth and pressure on margins make it tougher for companies to deliver on earnings expectations and the Manager continues to put great emphasis on selecting stocks that can execute their business plan regardless of the economic uncertainty. As we move towards the Brexit deadline, the Manager is preparing to take advantage of any short-term volatility or disruption, and if the opportunity presents, the Manager will increase its investments in strong businesses that can deliver.

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).

This document is intended for use by professional financial advisers only. The distribution of VAM Funds and the offering of the shares may be restricted in certain jurisdictions. Private investors should contact their financial adviser for more details on any of the products featured. It is the responsibility of any person in possession of this document to inform themselves of, and to observe, all applicable laws and regulations of any relevant jurisdictions. Prospective applicants for shares should inform themselves as to the legal requirements and consequences of applying for, holding and disposing of shares and any applicable exchange control regulations and taxes in the countries of their respective citizenship, residence or domicile. Click for Important Information