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Summary
Market update As expected, economic data over May continued to look poor as a result of the COVID-19 lockdowns, although this is mostly backward looking. Increasingly there are signs of lockdowns easing and a return to normality. Supported by continued easing of monetary policy, industrials and higher cyclical stocks generally performed well, while consumer staples and healthcare did not keep pace. The Global Equity Growth portfolio returned 3.7%. This was somewhat behind the MSCI All World Large Cap Index return of 4.4% for the month, but still more than 9% ahead of the peer group, year to date. The rapid recovery in equity prices, initially led by a handful of technology companies, is increasingly becoming more broad-based. This suggests that a sustained equity rally is possible. There was no trading activity on the portfolio in May. Home Depot reported positive results during the month with a positive outlook, despite suspending full-year guidance. The stock was the best performer in the portfolio in May, returning 13%. Yum China was the worst performing stock held during the month. However, its reduction in share price looks to have been a temporary, driven by trouble in Hong Kong and, with operations unhindered, has already bounced back. The recovery in global equity prices since the initial announcement of the coronavirus pandemic has been rapid. While the recovery was led by a handful of technology stocks it seems to be becoming more broad-based. We remain optimistic that, over the long term, quality growth stocks will provide long-term investors with good levels of returns. The degree of monetary stimulus by central banks also looks supportive for equity prices.
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