Global Leaders Equity Portfolio: April 2021

Summary

• The Global Leaders Equity Portfolio (USD) returned 3.2% during the month.
• The global equity market continued an upward trend in March with the FTSE All-World Index climbing 2.8% after rising 2.4% in February.
• A number of positions, including Adobe and CRH, were topped up.

 
Market update

Mega capitalisation stocks have performed relatively poorly in comparison to the wider market year to date. Traditional value stocks performed well during the month. Despite these headwinds the Global Leaders Equity Portfolio performed well in both absolute and relative terms returning 3.2%. 

There were few earnings announcements and trading within the  portfolio was limited to modest rebalancing.

Top performers during the month were Home Depot (+18.9%) continuing to benefit from strong demand, NXP Semiconductor (+10.6%) benefiting from global chip shortages and CRH (+10.3%) a beneficiary of increased US infrastructure spending. While detractors were Alibaba (-4.6%) there were concerns over potential regulatory intervention, Shell (-3.7%) with little major news, and Ping An (-3.1%) given a general reduction in the Chinese equity market.  

Economies look set to continue to recover from the pandemic. March saw the anticipated announcement of President Biden’s American Rescue Plan. At US$1.9 trillion the stimulus plan was larger than expected. US household savings are now around US$2 trillion above their pre-pandemic trend and credit metrics look good. This suggests that there will be a period of higher consumer spending. This, along with the higher than expected fiscal stimulus, means that there have been notable upward revisions to GDP growth forecasts. Despite this improving outlook the Federal Open Market Committee (FOMC) have indicated that low interest rates will remain in place. The FOMC acknowledged that inflation is expected to temporarily overshoot their 2% target, however they anticipate that this will not trigger higher interest rates in the medium term. The condition of easy money supply therefore remains in place which, as we have said for some time, has been the primary force in propelling equity markets higher.

We remain focused on identifying high quality growing companies trading on reasonable valuations.