Summary

• The Global Equity Growth Portfolio (USD) returned 2.1% during the month.
• A new position was established in Rexel, while Eli Lilly and Ecolab were reduced.
• 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.

Market update

Rising inflation expectations has seen traditional value stocks perform relatively well year to date which the Global Equity Growth Portfolio has little exposure to. Year to date performance however remains close to that of the global index. 

Top performing stocks held during the month were Home Depot (+18.9%) continuing to benefit from strong demand Vermilion Energy (+15.4%) and Facebook (+14.3%). Worst performing stocks held during the month were Axon (-13.9%), Eli Lilly (-8.8%) and Tencent (-8.1%).

A new position was established in Rexel, while positions in Eli Lilly and Ecolab were reduced. Rexel, a French electricals distributor, is well regionally diversified and looks set to benefit from the continuing trends of electrification and energy efficiency. While forecast growth is considerable shares trade on modest multiples. We believe that there is scope both for above market earnings growth and multiple expansion which would generate superior returns.

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 may be a period of higher spending. Along with the higher than expected fiscal stimulus 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 ever higher. 

We remain focused on identifying quality growing companies offering superior earnings growth and trading on reasonable valuations.