VAM Managed Funds (Lux) Commentaries

VAM DRIEHAUS FUND

As proxies for larger, broad equity exposures, note that the MSCI All Country World Index was up 1.51% and the S&P 500 was up 0.70%. On a relative basis, the VAM Driehaus Fund’s return was hurt by its overweight exposures to US smaller capitalisation, growth-oriented equities.

Economic demand remained strong in May and cyclical industries continued their outperformance versus secular growth industries that were market leaders in 2020. Cyclical companies that benefit from the economic reopening are experiencing improving demand, better pricing, low inventories, accelerating growth rates, easy year-over-year comparisons and rising earnings prospects. Secular growth companies such as software and e-commerce companies are still growing rapidly but are generally experiencing decelerating growth, tough year-over-year comparisons and higher valuations. The net result is an equity market that is quite different than the Covid-driven market of last year in terms of sector and style leadership. The largest concern for the market is higher inflation, economic overheating and the related impact on monetary policy and interest rates. Potentially unfriendly new tax policy and regulations are also key concerns for the market. 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

May was a more mixed month for markets relative to the prior strength exhibited in the first few months of 2021. Global equities were down 1% in GBP terms although some of this weakness reflects Sterling strength as the Pound was up 3% versus the Dollar in May. Again, relative to the first four months of the year, May was quiet in terms of market-moving news; the most significant story of the month was data showing surging US inflation. Markets wobbled in response as investor sentiment, once again, became fixated on the Fed’s potential response to inflation with rising yields exemplifying some of these concerns. Accordingly, value stocks outperformed growth stocks throughout May with industries such as financials and energy performing strongly, and the value-orientated UK market outperforming global markets.

Fixed income assets provided very modest positive returns in GBP terms this month. Despite bouncing around throughout May, government bond yields ended the month almost completely flat as short-term volatility triggered by inflation prints seemed to subside fairly quickly. Spreads were also flat with neither investment grade credit nor high yield moving significantly throughout the month.

VAM Balanced Fund

May was a more mixed month for markets relative to the prior strength exhibited in the first few months of 2021. Global equities were down 1% in GBP terms although some of this weakness reflects Sterling strength as the Pound was up 3% versus the Dollar in May. Again, relative to the first four months of the year, May was quiet in terms of market-moving news; the most significant story of the month was data showing surging US inflation. Markets wobbled in response as investor sentiment, once again, became fixated on the Fed’s potential response to inflation with rising yields exemplifying some of these concerns. Accordingly, value stocks outperformed growth stocks throughout May with industries such as financials and energy performing strongly, and the value-orientated UK market outperforming global markets.

Fixed income assets provided very modest positive returns in GBP terms this month. Despite bouncing around throughout May, government bond yields ended the month almost completely flat as short-term volatility triggered by inflation prints seemed to subside fairly quickly. Spreads were also flat with neither investment grade credit nor high yield moving significantly throughout the month.

VAM Growth Fund

May was a more mixed month for markets relative to the prior strength exhibited in the first few months of 2021. Global equities were down 1% in GBP terms although some of this weakness reflects Sterling strength as the Pound was up 3% versus the Dollar in May. Again, relative to the first four months of the year, May was quiet in terms of market-moving news; the most significant story of the month was data showing surging US inflation. Markets wobbled in response as investor sentiment, once again, became fixated on the Fed’s potential response to inflation with rising yields exemplifying some of these concerns. Accordingly, value stocks outperformed growth stocks throughout May with industries such as financials and energy performing strongly, and the value-orientated UK market outperforming global markets.

Fixed income assets provided very modest positive returns in GBP terms this month. Despite bouncing around throughout May, government bond yields ended the month almost completely flat as short-term volatility triggered by inflation prints seemed to subside fairly quickly. Spreads were also flat with neither investment grade credit nor high yield moving significantly throughout the month.

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