• The Global Equity Growth Portfolio declined 0.4% during the month in contrast to the global index, FTSE All World, return of 0.7%.
• Inflation prints were higher than expected and market volatility increased.
• Chinese stocks performed particularly poorly in response to lower credit impulse, regulatory concerns, and heightened fears of COVID-19 variants.

After a calm start, July saw increased equity market volatility though by month end the FTSE All World Index climbed 0.8%. Elevated inflation statistics were again ahead of consensus expectations. Technology and more traditionally defensive sectors such as healthcare performed better than more cyclical sectors such as energy and consumer discretionary. The portfolio’s high weighting to consumer discretionary was unfavourable during the month. However, China’s credit impulse r, which combined with continued negative regulatory concerns and heightened fears over further spread of COVID-19, saw weak performance from Chinese exposed equities.

The portfolio’s top performers for the month were Alphabet +7.9%, Ecolab +7.2% and Adobe +6.2%, and worst included the Chinese holdings Alibaba -13.9% and Tencent -18.0%, along with Vermilion -18.0%.

Many of the portfolio’s holdings reported their earnings in July. One of the most encouraging sets of results came from Alphabet who reported sales growth of 25% and earning per share growth of 31%, both 10% above consensus, as advertising continues to rebound.

There was minimal trading activity.

Our expectation is that higher quality stocks, such as those held in the portfolio, will perform more favourably in the more volatile market ahead.