17 November 2019
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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

US billionaires and a number of economists are on the attack following Democratic presidential hopeful Elizabeth Warren’s proposed wealth tax plan. Goldman Sachs CEO Lloyd Blankfein was among the most vocal of critics who took to Twitter to denounce her plans to impose a 2% tax on every Dollar of a person’s net worth over $50m, and an additional 1% on every Dollar in net worth over a billion Dollars. Warren is currently a frontrunner in the 2020 race to the White House.

Even though the US trade talks with China have stalled somewhat, markets are still taking comfort in the Fed’s willingness to keep monetary policy loose in the face of sustained low economic growth rates, and in the fact that key economic indicators in major economies have started to stabilise.

In corporate news, Disney unveiled Disney+ this week, officially entering the highly competitive and ever-changing streaming market, setting its stall against incumbents Netflix and Amazon Prime. The service attracted over ten million subscribers in two days.

The Numbers

GBP Performance to 14/11/19
1 Week
YTD
Absolute Level
Equity GBP Total Return (MSCI)

UK (MSCI UK)

-1.60%

12.30%

6435

Europe (MSCI Europe)

-1.40%

16.80%

6843

US (MSCI USA)

0.00%

23.90%

8337

Japan (MSCI Japan)

-0.70%

16.00%

6676

Emerging Markets (MSCI Emerging)

-3.40%

9.30%

492

Fixed Income GBP Total Return

UK Government (Barclays Sterling Gilts Index)

0.60%

8.30%

295

Investment Grade Hedged (Barclays Global Aggregate Corporate Bond Index)

0.60%

10.00%

301

High Yield Bonds Hedged (Barclays Global High Yield Index)

-0.20%

8.70%

518

GBP Performance to 14/11/19
1 Week
YTD
Absolute Level
Currency Moves

GBP vs USD

0.50%

1.00%

1.29

GBP vs EUR

0.70%

5.00%

1.17

GBP vs JPY

-0.50%

-0.20%

140

Commodities GBP Return

Gold (in £)

0.10%

13.70%

1138

Oil (in $)

-1.20%

16.10%

57

Source: Bloomberg, data as at 14/11/19

The Nuance

Market concerns over a recession have now started to ease. Sustained loose monetary policy is doing just enough to keep the economy ticking along at an acceptable rate, and Purchasing Managers’ Index numbers (PMIs) in key economies across the world are starting to look ever so slightly healthier.

The Manager expects growth to return to long-run trend rates; moderate but stable. From an investment perspective, this once again puts an emphasis on selectivity, while a rising tide lifts all boats, slow growth means that only companies that innovate and adapt are likely to drive returns for shareholders. Furthermore, central banks keeping rates lower for longer means that zombie companies – those that are able to survive only by guzzling on cheap debt – will be able to limp on for longer, making it doubly important to make sure that you’re investing only in solid companies with strong balance sheets, innovative product lines and good management teams.

Quote of the week

“UCAT is an alternative that will negotiate a Brexit deal which is kinder on pets and which sticks two paws up to Johnson and the likes of Jacob Rees-Moggy.”

Peter Cook, anti-Brexit campaigner

For those who thought that the state of British politics could sink no further, we introduce the latest candidate launching a bid to win a seat in Parliament: Stan the cat. The so called “anti-Brexit” cat, owned by campaigner Peter Cook, has officially launched a bid for the constituency of Gilingham and Rainhim in Kent. Cook plans to represent the animal himself in Parliament.

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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