VAM Managed Funds (Lux) Commentaries

March 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 2.67% and the S&P 500 was up 4.38%. On a relative basis, the VAM Driehaus Fund’s return was hurt particularly by its exposures to global smaller capitalisation equities and growth-oriented equities in general.

With US treasury yields remaining higher during the month, value-oriented stocks outpaced growth-oriented stocks and individual industries diverged in terms of performance. Biotechnology and software stocks, leaders for much of 2020, declined while banks and other cyclical-oriented stocks followed rates steadily higher. Higher rates and fears of higher inflation in the future continued to pressure equity multiples of stocks of companies with high expectations of future earnings growth. As discussed last month, if this rotation to value continues, investors should be prepared for market risks associated with investing in the global, growth and momentum-oriented strategies employed by the Fund’s underlying investments.

VAM DISCRETIONARY FUNDS

VAM Cautious Fund

March was a strong month for equities, with the global Index up almost 5% in GBP terms; however, the area of relative strength shifted away from the heavily growth-orientated recovery which has been playing out for almost a year now. Whilst financial news headlines throughout the month were dominated by rising US treasury yields, growth stocks which have been in vogue throughout the recovery came under strain with sell-offs in some of the loftier valuation businesses. Leading the charge in March were the more value-orientated corners of the market with sectors such as energy and financials coming in top of the pack. The UK market which has significant exposures to these sectors and a relative underweight to high-growth tech businesses beat the global market in March, finishing the month up over 5%.

Having entered the month with upward momentum, US Treasury yields continued to rise rapidly at the start of March, and a steepening of the yield curve (with the short end pinned at zero) was a theme throughout the course of the month, long yields pushing upward in fits and starts. Fed Chairman Jerome Powell reinforced his dovish stance multiple times in March, reiterating that he has absolutely no intention of raising interest rates or slowing down the bond-buying programme any time soon. Corporate yields followed those on government fixed income instruments, rising throughout the period whilst spreads remained relatively flat.

VAM Balanced Fund

March was a strong month for equities, with the global Index up almost 5% in GBP terms; however, the area of relative strength shifted away from the heavily growth-orientated recovery which has been playing out for almost a year now. Whilst financial news headlines throughout the month were dominated by rising US treasury yields, growth stocks which have been in vogue throughout the recovery came under strain with sell-offs in some of the loftier valuation businesses. Leading the charge in March were the more value-orientated corners of the market with sectors such as energy and financials coming in top of the pack. The UK market which has significant exposures to these sectors and a relative underweight to high-growth tech businesses beat the global market in March, finishing the month up over 5%.

Having entered the month with upward momentum, US Treasury yields continued to rise rapidly at the start of March, and a steepening of the yield curve (with the short end pinned at zero) was a theme throughout the course of the month, long yields pushing upward in fits and starts. Fed Chairman Jerome Powell reinforced his dovish stance multiple times in March, reiterating that he has absolutely no intention of raising interest rates or slowing down the bond-buying programme any time soon. Corporate yields followed those on government fixed income instruments, rising throughout the period whilst spreads remained relatively flat.

VAM Growth Fund

March was a strong month for equities, with the global Index up almost 5% in GBP terms; however, the area of relative strength shifted away from the heavily growth-orientated recovery which has been playing out for almost a year now. Whilst financial news headlines throughout the month were dominated by rising US treasury yields, growth stocks which have been in vogue throughout the recovery came under strain with sell-offs in some of the loftier valuation businesses. Leading the charge in March were the more value-orientated corners of the market with sectors such as energy and financials coming in top of the pack. The UK market which has significant exposures to these sectors and a relative underweight to high-growth tech businesses beat the global market in March, finishing the month up over 5%.

Having entered the month with upward momentum, US Treasury yields continued to rise rapidly at the start of March, and a steepening of the yield curve (with the short end pinned at zero) was a theme throughout the course of the month, long yields pushing upward in fits and starts. Fed Chairman Jerome Powell reinforced his dovish stance multiple times in March, reiterating that he has absolutely no intention of raising interest rates or slowing down the bond-buying programme any time soon. Corporate yields followed those on government fixed income instruments, rising throughout the period whilst spreads remained relatively flat.

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