Markets in a Nutshell — November 2020

Global equities fell for the second consecutive month after US stimulus delays, slow vaccine development and accelerating COVID-19 infections served to arrest the market’s rally. US equities also fell as US election uncertainty and reaccelerating coronavirus infections weighed on US bourses. Emerging markets rose, driven by Chinese stocks after China’s third-quarter GDP growth accelerated.

Global developed market sovereign bond yields diverged as expectations for slowing European growth propelled European sovereigns, while prospects for higher growth and higher rates in the US pressured Treasuries. The US dollar was mixed against major currencies as currency and credit markets struggled to find direction amidst the growing uncertainty. Soft commodity prices including wheat, corn and soybeans continued to advance while oil fell materially as runaway infection rates in the leading western economies are set to curtail the nascent rebound in travel.

As markets declined, the funds’ S&P 500 hedges contributed the most to performance. Shares in leading global agricultural chemicals producer Bayer detracted as the stock fell by a quarter on protracted product litigation issues. In the Foord Global Equity Fund, holdings in Tencent, Alphabet, IPG Phototonics and JD.Com helped the fund again to outperformed its benchmark—with the fund showing good alpha over one, two and now also three years.

The funds are well diversified and optimally balanced between protecting capital against elevated near term risks and capturing the long-term inflation beating investment opportunities that we can see. The Foord global funds maintain moderate hedges to the US markets given the prevailing risks.