MARKETS IN A NUTSHELL - NOVEMBER 2022
Global equities had their best month of the year as investors drew cheer from the US Federal Reserve intimation that its unrelenting pace of interest rate increases may slow. Some early data pointed towards inflation rolling over in parts of Europe, while US CPI figures slowed more than expected. European bourses outperformed US counterparts.
Emerging markets rallied more, led by China’s marked rebound from October’s steep decline. Though non-linear and moderately paced, China has taken initial steps towards the relaxation of its austere zero-COVID policies.
All global equity sectors were positive in November. Materials and real estate led the gains as Chinese government stimulus targeted at infrastructure and property companies encouraged investors back into these areas.
Industrial commodities also rose on the Chinese stimulus, while the oil price declined as investors began to factor in decelerating global economic growth. Precious metals gold and silver rose in anticipation of near-peak nominal yields and dollar weakness.
Potential peak interest rate differentials and incrementally dovish comments from US Fed officials curtailed the previously indefatigable attractiveness of the US dollar. The greenback weakened against the euro, British pound and Japanese yen. In fixed income markets, developed market bond yields declined as investors returned to sovereign bonds on signs of some deceleration in inflation.
The three Foord funds were generally well positioned for these market moves and are notably ahead of their respective benchmarks and peer groups in November and 2022 year to date. In the Foord International Fund, Industrial commodities company Freeport-McMoRan contributed the most to fund returns while the short S&P 500 futures hedge detracted in the rising market. Outperformance in the Foord Global Equity Fund and the Foord Asia ex Japan Fund was driven by the allocation to and stock selection in the consumer discretionary sector, with JD.com and Alibaba the largest contributors.
The multi-asset class Foord International Fund has a sizable allocation to select global equities that the managers believe are best placed to deliver real returns in a structurally higher inflation environment in the years ahead. This is balanced by meaningful hedges on the relatively expensive US equity market and very high quality short-term fixed income securities. The Foord Global Equity Fund and Foord Asia ex Japan Funds are invested in attractively priced companies with good earnings growth expected in the years ahead.
The Foord funds are well balanced for navigating the expected near-term market volatility while maintaining access to attractive longer term inflation beating investment opportunities.
08 Mar 2023
MARKETS IN A NUTSHELL - FEBRUARY 2023
In early February, the US Federal Reserve announced its eighth interest rate hike this cycle. The smaller 25bps increase takes the federal funds rate to 4.75%. With headline inflation slowing, investors were quick…
03 Mar 2023
MARKETS IN A NUTSHELL - FEBRUARY 2022
‘Markets in a nutshell’ is Foord Asset Management’s monthly overview of market movements.