2 minute read
Welcome
MARTYN SURGUY Chief Investment Officer
2020 was one of the strangest and most remarkable years in modern economic, social and financial history.
It began with the most disruptive virus in a century. We saw a sudden stop to the global economy, followed by the largest bouts of stimulus ever. Our ways of living changed abruptly, with political and social strains pushed towards breaking point. It’s not yet clear which of the changes will be permanent and which will fade into memory. Our team’s challenge throughout the year was to put many of these social and political issues aside and concentrate on the investment opportunities and risks that we faced. As ever, our fundamental investment beliefs and core principles helped us to do that. Who knew in January what would happen in the next 11 months? Owning a sensible spread of holdings, combined with the cushion provided by a judicious selection of alternative investments, enabled our portfolios to cope well. Matthew Yeates talks through the reasons why we’re holding alternatives in many of our portfolios later on. Of course, market conditions evolved as the year progressed, so being nimble along the way was also important. Better news emerged in the spring as central banks came to the rescue by delivering synchronised stimulus packages that were faster and larger than ever before – the global economy would not be allowed to slide into depression.
As the summer progressed, we began to see evidence that not only was the world going to avoid disaster, but it could be in a better shape than many were ready to believe. In late summer we added to a selection of ‘equity laggards’ that had not participated much in the rebound. Ahmer Tirmizi gives an insight into how our process identified this opportunity in his piece. This positioning was uncomfortable for a time as the pandemic situation deteriorated and economic fears grew in the autumn. But what is comfortable is rarely the same as what is profitable, and we were not minded to change course. And then, suddenly, the landscape shifted again in November, with vaccines and a market-friendly outcome to the US election. Our relatively non-consensual positioning in September became the norm almost overnight. So what now? The consensus is not always wrong and we intend to maintain our constructive positioning. 2021 should bring better news on both the pandemic and economic fronts. There will be new challenges, of course, not least of which will be the gradual removal of stimulus. We will remain flexible, while trusting the beliefs and process that served us well in 2020. We will also watch closely some of the longer-term economic and financial shifts that are taking place – such as the rise of Environmental, Social and Governance (ESG) investing, highlighted by Terence Moll later on.
