28 August 2020
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Welcome to our weekly newsletter, where the Manager summarises the key market developments over the last seven days.

The Noise

At the annual Jackson Hole Economic Symposium (held virtually for the first time this year), the Federal Reserve Chairman Jerome Powell announced a shift in policy. The Fed will drop its longstanding practice of pre-emptively lifting interest rates to combat higher inflation and has declared that full employment will no longer act as a trigger to raise rates. These commitments intend to combat any perceived under-inflation which might have materialised during recent years.

Half a million residents have been ordered to evacuate their homes in the East Coast US states of Texas and Louisiana as Hurricane Laura approaches. The category four storm is expected to bring wind speeds of 150mph (240kmph) and is close to being upgraded to a category five storm. The storm reached landfall yesterday morning US time.

Europe’s second Coronavirus wave continues to spread through the continent with France’s R rate (reinfection rate) hitting 1.4, Spain’s infection rate topping the US’s and Italy recording its highest daily case toll since May. However, death rates remain much lower in this second wave; experts have speculated that this is due to the average age of new carriers falling as the younger generations start to return to work and leisure.

The Numbers

GBP Performance to 27/08/20
1 Week
YTD
Absolute Level
Equity GBP Total Return (MSCI)

UK (MSCI UK)

0.10%

-19.70%

5483

Europe (MSCI Europe)

0.90%

-5.40%

6750

US (MSCI USA)

3.00%

11.00%

9613

Japan (MSCI Japan)

0.60%

-1.50%

6669

Emerging Markets (MSCI Emerging)

3.50%

2.50%

537

Fixed Income GBP Total Return

UK Government (Barclays Sterling Gilts Index)

-1.60%

5.90%

309

Investment Grade Hedged (Barclays Global Aggregate Corporate Bond Index)

-0.60%

4.20%

316

High Yield Bonds Hedged (Barclays Global High Yield Index)

0.50%

-0.80%

526

GBP Performance to 27/08/20
1 Week
YTD
Absolute Level
Currency Moves

GBP vs USD

-0.10%

-0.40%

1.32

GBP vs EUR

0.20%

-5.60%

1.12

GBP vs JPY

0.60%

-2.40%

140

Commodities GBP Return

Gold (in £)

-0.80%

27.70%

1474

Oil (in $)

0.60%

-24.40%

43

Source: Bloomberg, data as at 27/08/2020

The Nuance

Amidst all of the chaos in the world, companies are still pushing ahead with their business plans. A good example of this was Facebook’s announcement this week that it will be rolling out a new ecommerce feature on its social media platform.

The new Facebook Shop section of its flagship app will allow users to find new businesses and shop for various products. The announcement was taken well by the market; Facebook’s share price is up almost 12% week to date, benefitting the Manager’s portfolios.

Against a backdrop of noise from Coronavirus, natural disasters in the US, political tensions and social unrest, it’s encouraging to read such stories of companies getting on with business as usual and innovating where possible. The Manager remains diligently focused on finding the companies doing this best; those that are able to continue growing and pursuing their growth strategies whilst the tides swirl around them.

Quote of the week

“We find ourselves in a unique situation - having an iconic slogan that doesn’t quite fit in the current environment.”

KFC spokesperson

Global fast food giant KFC – incidentally owned by Yum! brands, a company held within the Manager’s portfolios – says it is halting its iconic “Finger Lickin’ Good” slogan given the current hygiene advice because of the Coronavirus pandemic. The company revealed its new look through a YouTube video, showing the slogan pixelated on posters and its food “buckets” saying: “That thing we always say? Ignore it. For now.” We’re no experts on fried chicken eating protocol but aren’t you already eating it with your hands?

Source: Sanlam Private Wealth

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For more information on VAM Funds, please contact us at sales@vam-funds.com or on +230 465 6860

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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).
This document is intended for use by professional financial advisers only. The distribution of VAM Funds and the offering of the shares may be restricted in certain jurisdictions. Private investors should contact their financial adviser for more details on any of the products featured. It is the responsibility of any person in possession of this document to inform themselves of, and to observe, all applicable laws and regulations of any relevant jurisdictions. Prospective applicants for shares should inform themselves as to the legal requirements and consequences of applying for, holding and disposing of shares and any applicable exchange control regulations and taxes in the countries of their respective citizenship, residence or domicile.


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