08 April 2020 View all posts

Global Strategy Fund: April 2020

The Ashburton Global Strategy Fund suffered its worst month since inception in March, as global equity markets took a severe beating. The sell-off that started on 20 February and continued deep into March. It has been the fastest 30% stock market decline ever, exceeding the pace of declines seen during the Great Depression. The severe contractions in risk assets resulted mainly in response to the fast spreading Coronavirus (COVID-19) pandemic, exacerbated by an oil price war between Russia and OPEC. Despite a rally in the last week of March, the MSCI ACWI ended March deep in the red, posting a return of -13.5%. Emerging markets ended the month down -15.4%. Global listed real estate was not spared the carnage, with the FTSE EPRA/Nareit Global Real Estate Index returning -22.3% for the month. Although global government bonds rose in price as central banks cut interest rates and restarted quantitative easing, corporate bond prices declined, resulting in a return of -2.2% for the Barclays Global Aggregate Index
Markets remain jittery, given the negative outlook on global economies following large scale lockdowns as governments attempt to curb the spread of the virus
Given the extreme volatility in market returns during the month, the weekly pricing of the Global Strategy Fund had a pronounced effect on the reported performance number for March. The NAV on NAV movement for the fund, measured from the price struck on 26 February to the price struck one 25 March (with many of the underlying components at that point at their lowest level reached intra-month), was -25.0%. This brings the reported 12-month return for the Ashburton Global Strategy Fund to -21.1% and the annualised five-year return to -1.7%
Despite this disappointing drawdown reported for March, most of the underlying funds have participated in the last week’s market recovery, as evidenced by the full month returns produced by the underlying funds
The Global Strategy Fund provides the FNB Advisory Wealth Solutions (CATII) with its offshore exposure and reflects the current macroeconomic house view of Ashburton Investments.