Income Generation / Total Return

7% p.a., net of fees

Daily

Luxembourg-regulated AIF

30 April 2020

Beauclerc Limited

Manager comment

The year-end rally lifted up major DM indices to their historical peaks. For the first time in recent years, US tech (Nasdaq) underperformed the traditional economy (S&P 500 and Euro Stoxx 50) while EM equities continued their decoupling. Both Omicron and the hawkish change in the Fed’s guidance dominated December. When indicating that inflation is no longer likely to be transitory, the Fed designated its new main driver in future policy actions, which should now be guided less by supporting US GDP growth than by containing the US CPI. However, given that current pressures on prices are mostly driven by supply-side shortages, against which monetary policy is rather inefficient, rising Fed Funds rates could instead result hitting a global demand already in soft landing, led by China weakening domestic growth. The risk of monetary policy error is high, as Asian zero-Covid policies and US/China trade tensions persist, both importing inflation in the US while not being in the Fed scope. Rising US yields into 2022 remain a major challenge for overbought US stocks. In addition, US company earnings might become another source of volatility for equity markets in 2022. Supply-chain and recruitment problems, could result in a profit margin squeeze particularly unwelcome as revenue growth starts its soft landing, exiting 18 months of booming economic conditions. As USD monetary conditions turn more restrictive and the global activity enters a mid-cycle transition, downward earnings revisions become a threat to expensive US equity valuations. In conclusion, equities should record only a modest performance in 2022, within a higher volatility regime. But bear market fears will be contained as real rates remain negative.

The Fund’s strong return in Q4 partly offset Q3 underperformance. This solid trend should carry into 2022, as the Fund’s running yield remains above 8% p.a. and the volatility regime should not fade away soon. External risks (sanitary/geopolitical) should recede gradually, limiting the risk of massive and sudden flash equity corrections. This new market configuration will be more supportive for the strategy going forward, allowing the Fund to deliver its high income target, with sufficient downside equity protection and limited duration risk.

YTD

  • Cumulated Performance
  • Share class A

As of 31/12/2021

3 months

  • Cumulated Performance
  • Share class A

As of 31/12/2021

1 year

  • Cumulated Performance
  • Share class A

As of 31/12/2021

3 years

  • Cumulated Performance
  • Share class A

As of 31/12/2021

All

  • Cumulated Performance
  • Share class A

As of 31/12/2021