18 September 2020
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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 and US Central Banks set their monetary policy this week. The Bank of England unsurprisingly kept rates on hold at 0.10%; minutes from the Monetary Policy Committee meeting show that the Bank will seriously consider the case for negative interest rates in the next few months. Meanwhile, the US Federal Reserve held rates at 0-0.25%, suggesting they would stay there for years and promising to keep them there until inflation rises consistently

US manufacturing data and initial jobless claims released this week show that the rapid recovery in the US economy has slowed. Federal Reserve Chairman Jerome Powell discussed this in his press conference on Wednesday, saying that “the path ahead remains highly uncertain”, echoing Bank of England minutes saying “the outlook for the economy remains unusually uncertain”.

Boris Johnson has suffered dissent in the ranks this week as he was hit by a Conservative revolt on Monday night over his plan to break international law by trying to override his own exit deal. The Prime Minister said the UK must reserve the right to override the Brexit deal to protect the country’s “economic and political integrity” – the same deal he has previously called a “triumph”, as Labour were quick to point out.

The Numbers

GBP Performance to 17/09/20
1 Week
Absolute Level
Equity GBP Total Return (MSCI)





Europe (MSCI Europe)








Japan (MSCI Japan)




Emerging Markets (MSCI Emerging)




Fixed Income GBP Total Return

UK Government (Barclays Sterling Gilts Index)




Investment Grade Hedged (Barclays Global Aggregate Corporate Bond Index)




High Yield Bonds Hedged (Barclays Global High Yield Index)




GBP Performance to 17/09/20
1 Week
Absolute Level
Currency Moves













Commodities GBP Return

Gold (in £)




Oil (in $)




Source: Bloomberg, data as at 17/09/2020

The Nuance

This week has seen the US S&P 500 Index pull back slightly, partly driven by the realisation that the buoyant force of monetary policy is starting to lose its potency. Ongoing support must therefore come from fiscal policy which, by its very nature, is prone to being stalled within courts and political systems.

Alongside this dynamic, signs are emerging that the pace of the economic recovery is slowing down. Recent consumer spending trends have moderated as fiscal assistance rolls off, whilst unemployment is picking up as assistance schemes come to an end and companies take a cold hard look at their staffing needs.

While financial markets give the illusion that the worst is behind us, the data is a reminder to investors that this recession still has some way to play out. Against such a background, it is advantageous to be positioned in companies that can weather the tough times ahead. The Manager’s strategy of investing in solid, resilient, well-financed companies remains appropriate.

The Manager’s continues to mitigate risks of US Dollar weakness by diversifying corporate revenue streams and while consumer price numbers will be volatile over the short term, it positions to protect against the longer-term structural inflationary pressures of de-globalisation and weakened Central Bank independence.

Quote of the week

“The Holdenstedt players did not understand. But we did not want to risk anything.”

Patrick Ristow, co-chair of Ripdorf football club.

One place where observing social distancing rules is particularly difficult is on a football pitch. An amateur German team from Ripdorf insisted on maintaining a two-metre distance from their opponents this week against local rivals Holdenstedt after hearing that their previous fixture had been against a side with Coronavirus carriers. Unsurprisingly, Ripdorf lost the game – it’s fair to say quite comfortably, as the final score was 37-0. Ripdorf decided to play the game rather than face a €200 fine. If you think losing 37-0 is bad enough, Ripdorf’s captain was also booked for “unsportsmanlike conduct”.

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.

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