Markets in a nutshell — March 2021

Global equities rose in March on expectations for accelerating global growth following vaccine rollouts, further stimulus measures and ongoing accommodative monetary policy. Developed market equities outperformed while the emergence of more virulent COVID-19 strains weighed on emerging markets.

US share markets rallied as President Biden signed a $1.9 trillion pandemic relief bill and announced his proposal for a $2 trillion infrastructure plan at the same time as economic data continued to surprise on the upside. European bourses gained as cyclicals rallied on higher bond yields. Emerging markets underperformed on US dollar strength and weighed down by rising cases of new COVID-19 strains, regulatory scrutiny on US-listed Chinese ADRs and Turkish central bank turmoil.

Defensives and cyclicals led the sector gains with utilities, consumer staples and industrials leading the way, while information technology lagged.

Developed market bond yields rose again on higher inflation expectations even as the US Federal Reserve downplayed inflation risks and reiterated its commitment to accommodative policy until unemployment and inflation exceeded its targets. The policy makers continue to play an oversized role in the operation of financial markets. The risks are rising.

Industrial commodities oil and copper retraced on US dollar strength, consolidating recent strong gains. Precious metals gold and silver declined on the opportunity cost of higher bond yields and the benign inflation outlook from central banks.

The Foord funds consolidated after an exceptional run up. US agriculture company FMC, retail pharmacy chain CVS, Scottish energy multi-national SSE, Chinese insurer PICC P&C and US hospitality play Extended Stay contributed the most to performance. Wharf Real Estate and US miner Freeport McMoran detracted while investment in Chinese tech names (some temporary collateral damage from the Archegos margin call fiasco) and the S&P hedges were the biggest detractors. We remain comfortable with the names that we own.

The Foord funds are behaving true to form with enough sustainable risk assets to stay in touch with the rising markets, but fundamentally positioned for elevated market risks. Risk management has never been more important.