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Global Equity Income Portfolio: October 2021


The FTSE All-World Index declined 4.3%, the FTSE All-World High Dividend Index by 2.5% and the Global Equity Income Portfolio by 2.4%.

As expected, the Federal Reserve Chair announced that interest rates will remain at zero and the current rate of bond purchases will continue until a reduction is justified by stronger economic data. Meanwhile the dot plot of future interest rate expectations by Federal Reserve Board members indicated a faster rate of interest rate rises than the market had anticipated. 

There was however much to fear during the month with concerns over the US debt ceiling and the terminal decline of Chinese property developer Evergrande. Our expectation is that agreement on the debt ceiling will be reached in short order and before the 18 of October when Janet Yellen, secretary of the treasury, predicts the USA would otherwise run out of money. The Chinese government will be keen to prevent any contagion from the failure of Evergrande and there have been considerable monetary injections locally to maintain sufficient liquidity in the insulated Chinese financial system.

The portfolio declined more or less in line with the FTSE All-World High Dividend Index. The best contributors were Shell +13.4%, BP +12.3%, US Bancorp +4.4% and the worst contributors were Admiral -11.8%, Novartis -11.0% and Roche -8.7%.

BP and Shell both benefited from rising hydrocarbon prices, while US Bancorp benefited from a steepening yield curve.