December 2021
back to all monthly reportsExecutive Summary
- Rising real yields, the new COVID variant Omicron and belief about a less dovish Fed post the Powell reappointment saw a tough month for equities.
- We think 2022 will be the year of global reversal in monetary policy with a few central banks sending interest rates higher, lower GDP growth, moderate equity returns, and high volatility with meaningful correction in equity markets in 1H 2022. At the same time, we do not see anything dramatic, as the global economic growth remains above trend and corporate earnings will continue to rise.
- The economists are pointing to the risks of a recession being very low before mid-2023 but progressively climbing after.
- On Dec 15th the FOMC doubled the pace of taper to $30bn a month, which would bring an end to QE in mid-March. Markets are pricing the Fed's first hike in June 2022. What’s next? History shows that in the first year of the Fed's hike, usually, economic growth stays strong, inflation carries on rising, and equities continue to advance.
- Chinese technology stocks may offer the portfolio downside protection and upside surprise in 2022.
- We continue to emphasize that quality - is the best strategy in the current business cycle (next 3-7 years) in most macro scenarios.
- The Technology of the Future Fund had a -4.91% return in November, in line with other major equity indexes and many innovative tech stocks, slightly underperforming the benchmark MSCI World Index (USD), which had a return of -2.30% .
- The two of our holdings delivered impressive returns in November: biotech company Dicerna (+82%) , taken over by Danish pharma giant Novo Nordisk; and Arqit Quantum (+74%) , a cyber security company that offers quantum encryption technology. Both companies possess innovative breakthrough technologies and are an example of core holdings of our fund.