Markets in a nutshell — April 2021

Global equities continued to rise, supported by stimulus measures, vaccine rollouts and the improving global economic outlook. Sector gains were broad-based but communication services, materials and real estate were the key outperformers.
 
US indices rallied as economic data and corporate earnings continued to beat expectations, while President Biden announced yet another trillion-dollar fiscal stimulus programme. The $1.8 trillion American Families Plan aims to support American families in child care, family leave and education, paid for by tax increases on the very wealthiest Americans. European indices also rose on strong corporate earnings, improving vaccination momentum and supportive monetary policy. Emerging markets trailed developed markets. India lagged after a double viral mutation ignited a catastrophic second COVID-19 wave that has pushed the country’s parlous public healthcare infrastructure to breaking point.
 
Commodities resumed their rally on US dollar weakness and accelerating global demand. Precious metals gold and silver gained on rising inflation expectations and copper rose close to all-time highs. The meaningful allocations in both Foord funds to largest listed copper miner Freeport McMoran and precious metals streaming company, Wheaton Precious Metals, contributed positively to returns. Alphabet also gained sharply and was the top contributor to performance in both funds.
 
The Foord International Fund also benefited from core holdings in Nestle and largest holding in US listed agricultural chemicals business, FMC Corp, both of which made strong gains. The fund’s largest detractors for the month were the holdings in Chinese banks ICBC and CCB which fell on weaker-than-expected earnings.
 
The Foord Global Equity Fund’s performance was hurt by the underperformance of Chinese tech companies JD.Com, Baidu Inc and Alibaba. These are all excellent businesses but the continued scrutiny of the technology sector in China weighed on sentiment.
 
Developed market bond yields broadly gained with US treasury yields being the exception. The US 10-year retraced as the US Federal Reserve downplayed the recent inflation spike as transitory and reiterated its accommodative stance. Notwithstanding, markets appear jittery about the risk of rising inflation given the massive stimulus. The Foord International Fund has zero allocation to government bonds given the unattractive risk reward profile.
 
The managers continue to favour equities over other asset classes but remain cautious and partially hedged given lofty valuations of US bourses. The Foord funds are behaving true to form with sufficient, sustainable risk assets to stay in touch with the rising markets, but fundamentally positioned for the elevated market risks. Risk management has never been more important.