The long & short of what’s next
by James Klempster, CFA
This week heralds the start of the final quarter of 2020. What an extraordinary year it has been thus far. Of course, for investment managers, the key area to focus on is what next? This question can have multiple different dimensions. For example, the answer might be very different if we are focusing on the long term as opposed to the short term. We have made the point repeatedly that in the long run we will cast this virus off. It remains a truism that the virus is not unpicking the very fabric of society nor is it destroying the functioning of capital markets and as a result, from an investment perspective at least, we will get through this.
- Sell-off in global risk assets
- Uptick in coronavirus cases hampers service sector
- Brent crude fell 2.9% to $41.9 a barrel
- Gold fell 4.6% ending the week at $1861.6 per ounce
Staying out of the rough
by Michael Clough
This year has obviously been far from normal and the Covid pandemic meant the US Open, normally held in June, was pushed back to a late summer week in September. The US Open is regularly dubbed the ‘toughest test in golf’. One of the reasons is long, thick grass (known as rough) which sits unsettlingly closely to the finely manicured fairways, punishing any marginally errant shot. Within equities, growth exposure has been the equivalent of finding the fairway this year, whilst sole exposure to value has been akin to hacking through the deep rough.
- Global Covid-19 infections exceed 30 million with the global death toll approaching 1 million.
- A mixed week saw global equities ending the week flat
- Brent crude rose 8.3% to $43.2 a barrel
- Gold rose 0.5% to 1950.9 per ounce
by Richard Stutley, CFA
Realpolitik is the art of designing policy based on practical rather than ideological considerations: what works, not what we think should work. Pragmatism is an important part of investing and tells us that positioning too aggressively around political events like Brexit and the US election is risky, because both the result and the market outcomes are difficult to predict. Given a low probability of correctly predicting either, we need to see evidence of significant mispricing in order to introduce large positions in our portfolios.
- A mixed week for global equity markets which returned -1.3%
- Vaccine trials resume after last week’s pause
- Brent crude fell -6.6% ending the week at $39.8 a barrel
- Gold rose 0.3% to end the week at $1940.5 an ounce
Yellow metal, green lights
by Andrew Hardy, CFA
Gold has outshone most other investments in 2020, having broken through to new all-time highs in July, surpassing levels last reached nearly 10 years ago. Year to date the bullion price has increased by 27%, trumping all broad equity markets and most other assets – only the tech heavy NASDAQ index has kept pace. Over five years, gold has risen by over 70%. Today’s market and economic conditions go a long way towards justifying these gains though and we remain committed holders within our multi-asset portfolios.
- After their best month since April, US equities fell back last week
- The CDC in the US has warned health officials to be ready to distribute a vaccine by the 1st November to at-risk individuals
- Brent crude fell -5.3% ending the week at $42.7 a barrel
- Gold fell -1.6% to end the week at $1933.9 an ounce