VAM Managed Funds (Lux) Commentaries

April 2021 (click here to download)

VAM DRIEHAUS FUND

As proxies for larger, broad equity exposures, note that the MSCI All Country World Index was up 4.37% and the S&P 500 was up 5.34%. On a relative basis, the VAM Driehaus Fund’s return was hurt by its exposures to US smaller capitalisation equities and Emerging Markets growth-oriented equities.

During the month cyclical stocks continued to outperform many of last year’s secular winners. The market’s performance was largely driven by the rapidly improving US economic performance driven by increasing Covid vaccines and reducing new case counts. This fuelled optimism about a strong reopening of the economy. While the fundamental picture for the US market is strong, the combination of the reopening, pent-up demand, low inventories and massive stimulus is putting upward pressure on inflation expectations. Potentially unfriendly new tax policy and regulations are also key concerns for the market.

VAM DISCRETIONARY FUNDS

VAM Cautious Fund

Once again, April proved to be another strong month for equity markets with the global Index up 4% in GBP terms. Towards the start of the month, equity Indices were driven up by further dovishness from Central Banks and a pause in the dynamic of persistently rising bond yields. In the last few weeks of April, positive economic data emerged from the US, allowing markets to shift their focus to corporate earnings announcements, which have been encouraging on the whole with a few truly exceptional results given the circumstances. Earnings season has, however, exemplified the extent to which valuations are already stretched with plenty of stocks failing to be rewarded for meeting or even beating analyst estimates due to the high levels of optimism and confidence already reflected in current prices.

Yields on government bonds entered April with upward momentum, however, the month proved to offer some respite for this dynamic as yields on both UK and US debt remained largely flat throughout the period. Across the rest of the credit spectrum, spreads tightened ever so slightly, with corporate credit providing moderate returns throughout the month. Though still relatively small, tightening was more pronounced further down the credit spectrum, with high yield providing the largest returns in April as yields on this part of the spectrum remain furthest above their historic lows.

VAM Balanced Fund

Once again, April proved to be another strong month for equity markets with the global Index up 4% in GBP terms. Towards the start of the month, equity Indices were driven up by further dovishness from Central Banks and a pause in the dynamic of persistently rising bond yields. In the last few weeks of April, positive economic data emerged from the US, allowing markets to shift their focus to corporate earnings announcements, which have been encouraging on the whole with a few truly exceptional results given the circumstances. Earnings season has, however, exemplified the extent to which valuations are already stretched with plenty of stocks failing to be rewarded for meeting or even beating analyst estimates due to the high levels of optimism and confidence already reflected in current prices.

Yields on government bonds entered April with upward momentum, however, the month proved to offer some respite for this dynamic as yields on both UK and US debt remained largely flat throughout the period. Across the rest of the credit spectrum, spreads tightened ever so slightly, with corporate credit providing moderate returns throughout the month. Though still relatively small, tightening was more pronounced further down the credit spectrum, with high yield providing the largest returns in April as yields on this part of the spectrum remain furthest above their historic lows.

VAM Growth Fund

Once again, April proved to be another strong month for equity markets with the global Index up 4% in GBP terms. Towards the start of the month, equity Indices were driven up by further dovishness from Central Banks and a pause in the dynamic of persistently rising bond yields. In the last few weeks of April, positive economic data emerged from the US, allowing markets to shift their focus to corporate earnings announcements, which have been encouraging on the whole with a few truly exceptional results given the circumstances. Earnings season has, however, exemplified the extent to which valuations are already stretched with plenty of stocks failing to be rewarded for meeting or even beating analyst estimates due to the high levels of optimism and confidence already reflected in current prices.

Yields on government bonds entered April with upward momentum, however, the month proved to offer some respite for this dynamic as yields on both UK and US debt remained largely flat throughout the period. Across the rest of the credit spectrum, spreads tightened ever so slightly, with corporate credit providing moderate returns throughout the month. Though still relatively small, tightening was more pronounced further down the credit spectrum, with high yield providing the largest returns in April as yields on this part of the spectrum remain furthest above their historic lows.

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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