VAM Managed Funds (Lux) Commentaries

VAM Fund

For the first half of May, the Manager saw a protraction of much of the volatility and price action that we experienced during April as markets continued to fall. There was, however, a change in sentiment as the sell-off bottomed out and indices began to recover during the second half of the month. This was a generally broad rally which brought markets back to around flat for the month. Investors seemed to have come to terms with the inflationary pressures coming out of the Ukraine crisis and worries about the China lockdowns. While the crisis in Ukraine looks set to continue, the lockdown in China eased as Shanghai said they would reopen at the beginning of June. While inflation continues to be a major concern, economists were forecasting reaching peak US inflation before Q4 at a rate not very much higher than where we currently sit. This, coupled with news that, under certain circumstances, the Federal Reserve intimated that it may pause or at least slow the pace of tightening, improved investor confidence. A relatively robust earnings season and a 40bp drop in 10-yr US rates provided further comfort for investors.

Volatility is likely to continue over the summer; however, the Manager continues to think quality growth can continue to rise from these levels. With an increased pivot towards basic materials across some of the funds, a sector that remains undervalued, the Manager’s outlook remains positive. It thinks this current drawdown is an excellent long-term opportunity to allocate. The Manager is also pleased with the resilience of the Fund’s exposure to infrastructure. This relatively new allocation has held up well against the backdrop of a broad market sell-off and has mitigated some of the volatility we have seen recently.

 

VAM DISCRETIONARY FUNDS

VAM Cautious Fund

During May, more companies reported their earnings, with particular weakness in consumer-facing businesses, combined with ongoing manufacturing difficulties stemming from disorganised supply chains. Surprisingly, global equities were flat against a wave of poor corporate and economic news flows, though UK equities rallied 1.3% driven by energy stocks. Both consumer discretionary and consumer staples were down around 4% as relentless inflation sapped confidence and purchasing power. Eurozone inflation hit a new record in May reaching 8.1% and there was further questioning around the narrative that inflation was peaking. UK 10-year yields hit 2.1% at the end of May, a level last seen in 2015. The surprisingly weak US productivity gains of -7.5% in Q1 2022 shook the market, alluding to structural issues within the global economy.

VAM Balanced Fund

During May, more companies reported their earnings, with particular weakness in consumer-facing businesses, combined with ongoing manufacturing difficulties stemming from disorganised supply chains. Surprisingly, global equities were flat against a wave of poor corporate and economic news flows, though UK equities rallied 1.3% driven by energy stocks. Both consumer discretionary and consumer staples were down around 4% as relentless inflation sapped confidence and purchasing power. Eurozone inflation hit a new record in May reaching 8.1% and there was further questioning around the narrative that inflation was peaking. UK 10-year yields hit 2.1% at the end of May, a level last seen in 2015. The surprisingly weak US productivity gains of -7.5% in Q1 2022 shook the market, alluding to structural issues within the global economy.

VAM Growth Fund

During May, more companies reported their earnings, with particular weakness in consumer-facing businesses, combined with ongoing manufacturing difficulties stemming from disorganised supply chains. Surprisingly, global equities were flat against a wave of poor corporate and economic news flows, though UK equities rallied 1.3% driven by energy stocks. Both consumer discretionary and consumer staples were down around 4% as relentless inflation sapped confidence and purchasing power. Eurozone inflation hit a new record in May reaching 8.1% and there was further questioning around the narrative that inflation was peaking. UK 10-year yields hit 2.1% at the end of May, a level last seen in 2015. The surprisingly weak US productivity gains of -7.5% in Q1 2022 shook the market, alluding to structural issues within the global economy.

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

Disclaimer

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

This is a marketing communication. 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