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09 Dec 2021

Markets in a nutshell — November 2021

The new and potentially more transmissible Omicron COVID-19 variant latterly weighed on global equities, with the tech-heavy US bourses outperforming. European stocks underperformed on waning economic recovery expectations and continued high gas price expectations.

Emerging markets underperformed with Chinese bourses lagging on continued regulatory pressure of the country’s tech sector and ongoing worries for property developer contagion risk. Energy centric Russian markets plunged on the back of a collapsing oil price while Korea, India and Brazil also came under pressure.

Information technology was the only positive sector as investors rotated into defensive, work-from-home pandemic beneficiaries while energy led the broader market fall on the lower oil price. Financials and communication services also lagged economic growth concerns.

The US 10-year bond yield was little changed despite Fed Chairman Powell further highlighting inflation pressures. A mid-month rise in yields was short lived as investors returned to the relative safety of sovereigns following the emergence of the Omicron variant. The US dollar also strengthened on the general flight to safety.

Bellwether industrial metal copper and energy commodities, including oil, fell as investors quickly sold economically sensitive cyclical assets. Precious metals, silver and gold, moved lower following Jerome Powell’s re-appointment as US Fed chair and rising dovish expectations on US interest rate movements.

The Foord International Fund’s investment in leading agricultural chemicals company FMC contributed the most to performance, while Chinese technology platform Alibaba was the largest detractor. The Foord Global Equity Fund underperformed the market index in the month, driven by the over-weight allocations to communication services, health care and consumer discretionary. The recent market volatility has provided attractive opportunities for quality long-term holdings and the managers maintain high long-term conviction in the current positioning.

The Foord funds are finely balanced between the long-term inflation beating returns that are currently available and mitigating against the elevated short-term risk environment. Investors must enjoy a restful end to the year in the knowledge that Foord remains all-hands on deck, permanently vigilant in the markets that never sleep.

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