This past month saw the Covid-19 infection and fatality numbers dramatically drop through Europe and parts of the United States, as the combinations of the lockdowns and the warmer weather seemingly has progressed the situation past the worst; for now. During the month there was further positive news on vaccine testing as the world’s top pharmaceutical and biotech firms race to find the solution to this virus. European nations and the United States have tentatively begun to ease lockdown restrictions whilst charting a course towards a gradual reopening of their economy’s.
Markets have become more positive on the news…
This positive news was reflected through global markets which continued to rise in price with the FTSE100 up 3% and the S&P 500 up 4.5% over the month. The strong rise had previously been dominated by the strength of the large technology and healthcare companies. However, towards the end of May, as investor confidence for the global economy beyond the Covid-19 crisis grew, the equity markets saw a rotation, with a recovery in those companies that have been hardest hit by the Covid-19 economic shut down, including the consumer, leisure and industrial sectors.
Where are we heading…
With markets having recovered well since the lows of March 2020 and as we enter the final month of the second quarter, we believe that investors will be looking for justification of the positive sentiment. Key indicators will include evidence of the successful reopening of the European and US economies, as well as a continued downtrend in Covid-19 cases, to affirm the direction of the markets, ahead of what will likely be a very difficult 2nd quarter earnings season. We expect there to be continued volatility especially considering the ongoing geopolitical unease between the US and China and the looming US Presidential elections later this year.
What we have been doing on Bespoke Portfolios…
On the Bespoke Investment team we are maintaining an overweight position to equities for clients. We are in the process of taking profits out of certain companies in the energy and mining sectors, whilst topping up one of the core financials, Emerging Market equities and the broad exposure to the FTSE 100 Passive Fund. As the market recovery continues, the Bespoke team aim to gradually reduce the equity overweight in favour of a selection of high-quality opportunities, including exposure to the alternative fixed income market, amongst others. In addition, following detailed in-house research the team are looking to increase exposure to international equity markets through direct exposure to high quality US and European Companies.
Update on the Hardy Managed Portfolio positioning…
We did not make any fund changes within the Hardy Managed Portfolios in May, as we were happy with our active decision to remain overweight equities and underweight bonds. There has been a diverse range of funds which have performed strongly over the month, with the Merian Gold & Silver, JPM Japan and Brown Advisory US Flexible Equity all up over 10%. We are currently researching and planning our next rebalance and are likely to introduce a US fund, one that invests in Larger Companies, and two new Alternative funds which will invest part of the cash which we have chosen to hold through the recent volatility.
Important Information
This update is for information only and does not constitute advice or a recommendation and you should not make any investment decisions on the basis of it. The views and opinions within this document are those of Casterbridge Wealth at time of writing and may change without notice. They should not be viewed as indicating any guarantee of return from an investment managed by Casterbridge Wealth nor as advice of any nature. Past performance is not a guide to the future. The value of an investment and any income from it may go down as well as up and the investor may not get back the original amount invested.
