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Performance Monitor - To 31st August 2021

Update on Portfolio Performance from our Fuund Management Partners, Cape Berkshire Asset Management.

Note From The Managing Director.

Mark Insley, Managing Director

A month-end where I only have positive things to say on our numbers and our positions around the world. After a sticky start to the month especially in emerging markets, the last 2 weeks have roared back with a real cyclical alpha for the portfolios. We now sit in a position of 10/10 portfolios ahead of benchmark, quarter to date so we hope to hold this in September when we report our quarterly numbers.

Key wins have been in the ongoing overweight to India, especially when we compare this to peers who have been hurt with equivalent overweights in China and Brazil. The Alquity India fund on the month was again a double-digit winner. In the UK it's been good to see a continued reopening and from a performance perspective, we have wins across all 5 portfolios on the UK mid-cap overweight we hold. The position ranges from 3% to 7% in CBAM 5. We had actually sold down the FTSE 100 large-cap position mid-month to fund some new money flows we saw into European equities, where we moved back to neutral from what had been as large as a 3% underweight from others buying into the space. We added small-cap Europe to, again, build on the themes and the spread of equities we hold in other developed markets. In the bond space, much of the talk has been the sudden reversal in 10-year US treasury yields where the 2% predictions have swung all the way back to 1% predictions. It is small numbers but as we have said, for years the risk of over-exposure to bonds remains, whilst still having to maintain positions for their interest-bearing characteristics. We remain particularly pleased with our MAN GLG High yield manager who seems to keep adding Alpha and must be close to the top in the whole sector. The fund's performance remains exceptional and the only risk we see is a continued compression of high yield to corporate bond spreads and a potential jump-out of high yield. We hope clients are positive on the monthly- and year-to-date numbers we have returned


Note From The Investment Team


August portfolio returns ranged from CBAM1 returning 1.10% to CBAM5 V2 returning 3.66 %. We saw a wider spread in portfolio performance of 2.56% given the risk-on sentiment on global re-opening and mass vaccination optimism.

*These tables simply indicate CBAM's portfolio's over the stated time periods up to 31/08/2021.


**V2 versions of the portfolios use the identical asset allocations to V1 using Mutual Funds instead of Exchange Traded Funds on the basis of client size and client preference.



Inflationary concerns were somewhat allayed by the Federal Reserve bank remarks indicating that they would continue to take an accommodative stance to monetary policy as they assess their dual mandate of optimising employment and keeping inflation under check. Similarly, the European Central Bank recently announced that it felt it is too early to start tapering liquidity as they pursue their mandate to maintain price stability. July inflation numbers were unchanged in the US at 5.4% whilst there was some easing of UK inflation down to 2% from 2.5% in June leaving some headroom for central banks to remain accommodative. Emerging markets experienced headwinds as Chinese regulators cracked down on tech companies but saw a recovery as investors piled in to buy the dip subsequently fuelling a global equity market rally. We also saw a strong performance from Japanese equity after several state of emergency Covid lockdowns as the market reacted to news Prime Minister Suga will not be running for re-election potentially ushering in an era of fiscal spending under new leadership. Global vaccination roll-out has been strong in developed countries with 65% of the UK population and 54% of the US population fully vaccinated with some recent improvement in roll-out in less developed countries spurring global equity markets in economic re-opening optimism despite concerns on the more transmissible delta variant. Given the backdrop of the above factors, over the month of August, the best performing funds were Alquity Indian Subcontinent, JPMorgan Japan and Jupiter UK Smaller Companies whilst the worst-performing funds were 91 Global Gold, SPDR UK Gilts and Vanguard European Government Bond. We continue to closely monitor these and other developments that influence the performance of the portfolios on an ongoing basis.

 

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