04 September 2020
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Seven Insurance Brokers Market Update
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VAM Funds

Welcome to our weekly newsletter, where the Manager summarises the key market developments over the last seven days.

The Noise

UK house prices hit an all-time high this week as pent-up demand fuelled the largest monthly rise in 16 years. The average home in the UK is now worth over £224,000, 3.7% more than they were last August. Housing and housebuilding stocks have benefited from the announcement with companies such as Taylor Wimpey and Bellway rallying on the news.

US stocks fell yesterday as the rotation away from technology shares picked up pace.The last few months have seen the sector running hot with large technology names such as Apple, Amazon, Google and Microsoft reaching all time highs. Cries of stretched valuations in some of these names are rife in the market, but the verdict on this speculation remains to be seen.

Japanese Prime Minister Shinzo Abe announced his resignation last Friday to undergo treatment for a chronic illness, ending his run as the country’s longest serving leader. As Japan looks to a new Prime Minister, the stock market and the Yen have both stayed strong, reflecting confidence that any current policies will be maintained.

The Numbers

GBP Performance to 03/09/20
1 Week
YTD
Absolute Level
Equity GBP Total Return (MSCI)

UK (MSCI UK)

-2.30%

-21.50%

5390

Europe (MSCI Europe)

-1.40%

-6.70%

6696

US (MSCI USA)

-1.40%

9.40%

9531

Japan (MSCI Japan)

0.60%

-0.90%

6751

Emerging Markets (MSCI Emerging)

-1.30%

1.10%

534

Fixed Income GBP Total Return

UK Government (Barclays Sterling Gilts Index)

1.80%

7.90%

315

Investment Grade Hedged (Barclays Global Aggregate Corporate Bond Index)

1.10%

5.40%

319

High Yield Bonds Hedged (Barclays Global High Yield Index)

0.60%

-0.30%

529

GBP Performance to 03/09/20
1 Week
YTD
Absolute Level
Currency Moves

GBP vs USD

0.60%

0.20%

1.34

GBP vs EUR

0.40%

-5.20%

1.13

GBP vs JPY

0.30%

-2.10%

142

Commodities GBP Return

Gold (in £)

-0.60%

27.00%

1456

Oil (in $)

-4.50%

-27.80%

42

Source: Bloomberg, data as at 03/09/2020

The Nuance

This week has seen a pull-back in tech companies across the board with household names such as Apple, Netflix, Tesla and Facebook giving up some of the gains they’ve made over the last few months.

This moderation isn’t surprising given the recent strength of these companies and rather stretched valuations in a few of them. Despite the movement, the Manager doesn’t see this as being an alarm bell just yet; the longer-term trends are likely to persist for the time being.

Whilst tech has sold off, other areas of the market have benefitted from the rotation of portfolios. Cyclical travel companies such as Booking Holdings and Intercontinental Hotels Group have seen an inflow of capital, benefitting the Manager’s portfolios. It keeps a close watch on these industry trends, ensuring its portfolios are positioned appropriately given the market outlook.

Quote of the week

“I take responsibility for trusting the word of a neighbourhood salon. It turns out it was a setup.”

Nancy Pelosi, US House of Representatives Speaker.

This week, the Democratic House speaker was captured on security footage (which was leaked to Fox News) inside a San Francisco hair salon not wearing a mask, even though the city’s Covid-19 restrictions only allow service outside. Pelosi will find it very hard not to come across as a hypocrite given her frequent rebukes towards President Trump for undermining his own government’s advice on wearing masks. Her defence? She accused the salon of setting her up, going as far as to say “I think this salon owes me an apology for setting up”. Ok Nancy, keep your (beautifully styled) hair on.

Source: Sanlam Private Wealth

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Sanlam Private Wealth is a trading name of Sanlam Private Investments (UK) Ltd.

Past performance is not a reliable indicator of future returns, investing involves risk and the value of investments, and the income from them, may fall as well as rise and are not guaranteed. Investors may not get back the original amount invested.

The information and opinion contained in this market view should not be treated as a forecast, research or advice to buy or sell any particular investment or to adopt any investment strategy. Any views expressed are based on information received from a variety of sources which we believe to be reliable, but are not guaranteed as to accuracy or completeness by Sanlam. Any expressions of opinion are subject to change without notice.

Disclaimer: VAM Cautious, Balanced and Growth Funds are compartments of VAM Managed Funds (Lux).
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