23 October 2020
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VAM Funds

Welcome to our weekly newsletter, where the Manager summarises the key market developments over the last seven days.

The Noise

Uncertainty looms surrounding the result of a proposed US stimulus bill. House Speaker Nancy Pelosi was in discussions with Treasury Secretary Steven Mnuchin yesterday to attempt to resolve blockages caused by Republican push-back concerning the size of the bill. Markets have slipped this week in response whilst the US Dollar has weakened against most major currencies.

In July, EU leaders agreed to set up a €750bn recovery fund to help the bloc alleviate the economic stresses caused by the Coronavirus; the agreement heralded the first time that the EU would undertake collective borrowing. This week has seen the first issuance of these bonds under its Support to Mitigate Unemployment Risks in an Emergency (SURE) programme. Demand for the bonds has been extremely strong, with orders totalling €233m; the implications for the dynamics of EU debt markets remains to be seen.

In the UK, both Ireland and Wales have entered “fire break” lockdowns, closing nonessential retailers and requiring the populous to stay at home for two weeks. After failing to reach an agreement with local leaders in Manchester, Boris Johnson’s government has enforced Tier 3 restrictions on the region. Manchester will not be receiving the £65m financial support it was lobbying for, led by Greater Manchester Mayor Andy Burnham.

The Numbers

GBP Performance to 22/10/20
1 Week
Absolute Level
Equity GBP Total Return (MSCI)





Europe (MSCI Europe)








Japan (MSCI Japan)




Emerging Markets (MSCI Emerging)




Fixed Income GBP Total Return

UK Government (Barclays Sterling Gilts Index)




Investment Grade Hedged (Barclays Global Aggregate Corporate Bond Index)




High Yield Bonds Hedged (Barclays Global High Yield Index)




GBP Performance to 22/10/20
1 Week
Absolute Level
Currency Moves













Commodities GBP Return

Gold (in £)




Oil (in $)




Source: Bloomberg, data as at 22/10/2020

The Nuance

Against a backdrop of political uncertainty and still no signs of optimism in Covid-19 case numbers, investor confidence seems to have moderated for the first time in weeks. Market sentiment continues to swing around, allowing the Manager to lean against short-term trends to make sensible incremental decisions.

Market weakness in September allowed the Manager to make just these sort of adjustments, buying into good companies where shortterm market sentiment had driven down prices. As valuations pulled back, the return potential for these high quality businesses improved, allowing the Manager to allocate more capital to the positions. Some of this return potential was realised in October as portfolios were rewarded by subsequent market strength.

With the US election looming, a stimulus deal which seems unable to make ground and Covid-19 cases rising, uncertainty is rife and markets are unlikely to make anything other than moderate progress in the short term. As such, the Manager is, once again, leaning against the trend and using market strength to pare back positions which it judges to have run ahead of medium-term business prospects.

Quote of the week

“You’re spoiling our fun.” “We should be having the time of our lives.”

Nottingham Trent University students.

With tuition fees, accommodation, and “extra-curricular spending”, a University education does not exactly come cheap. So it’s fair to say that an additional £10,000 cost probably wasn’t a welcome surprise for four Nottingham Trent University students this week. The students were fined £10,000 each after throwing a party despite Coronavirus restrictions as the city is currently in Tier 2. After reports from community support officers, the group were approached by police. The students claimed that everyone had left, but upon further inspection, officers found more than 30 people hiding throughout the house. Nottinghamshire Police reported that the students accused them of “spoiling their fun” – and that they should be having the “time of their lives”.

Source: Sanlam Private Wealth

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Sanlam Private Wealth is a trading name of Sanlam Private Investments (UK) Ltd.

Past performance is not a reliable indicator of future returns, investing involves risk and the value of investments, and the income from them, may fall as well as rise and are not guaranteed. Investors may not get back the original amount invested.

The information and opinion contained in this market view should not be treated as a forecast, research or advice to buy or sell any particular investment or to adopt any investment strategy. Any views expressed are based on information received from a variety of sources which we believe to be reliable, but are not guaranteed as to accuracy or completeness by Sanlam. Any expressions of opinion are subject to change without notice.

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