Income Generation / Total Return

7% p.a., net of fees

Daily

Luxembourg-regulated AIF

30 April 2020

Beauclerc Limited

Manager comment

The rebound in equity markets that started early March lost its momentum in April, with major indices recording heavy losses in the final week of the month, as the FOMC meeting early May was approaching. Growth sectors drove indices lower, triggering a global underperformance of US equities, with S&P 500 and Nasdaq losing 9% and 13% in April, ending at -13% and -21% YTD respectively.

The major financial markets headwinds continued to prevail in April. The decline in the Chinese activity deriving from the zero-Covid policy became a reality in April. Most domestic macro data dropped significantly and the contagion risk to worldwide activity has become centre stage. In addition, many Fed officials indicated the likelihood of a much faster hiking-rate cycle in 2022, which resulted in adjusting upward the forward Fed-fund rates once again. As the US domestic economy showed little signs of slowing down in April, the pressure on the Fed keeps increasing, as well as the risk of a policy error leading to a recession in 2023. Finally, the perspective of a cease-fire in the Ukrainian conflict has vanished in April, while the aggressive rhetoric between US and Russia increased. More than the risk of an escalation in the conflict, it is now obvious that the configuration of high energy prices and supply disruptions will prevail for much longer in Europe.
Finally, the US earnings season did not provide its usual support to equity indices. 80%+ of companies did beat their forecasts, but they ended up with a flat y/y growth in overall earnings. At the sector level, Industrials and Energy were helped by easy comparables, while Financials hinted already at the more challenging macro environment. Finally, few mega cap in the Tech sector missed their earnings targets, triggering a massive selloff in the growth sector late in the month. As the global headwinds show little chance of easing in the short term, equity markets remain vulnerable while volatilities keep rising gradually.

The Fund registered a loss in April, as equity market declines and the surge in volatilities both impacted secondary market valuations of the volatility-income notes. However, the Fund’s defensive positioning was increased in April, as reinvestments of expiries and subscriptions were delayed, in order to build a temporary cash buffer up to 32%. The allocation to volatility income notes has decreased to 60% of the portfolio, with 4.7% average residual protection and only two-month maturity left. Therefore, the participation to further equity market drawdowns ahead of the May FOMC is substantially reduced.

YTD

  • Cumulated Performance
  • Share class A

As of 29/04/2022

3 months

  • Cumulated Performance
  • Share class A

As of 29/04/2022

1 year

  • Cumulated Performance
  • Share class A

As of 29/04/2022

3 years

  • Cumulated Performance
  • Share class A

As of 29/04/2022

All

  • Cumulated Performance
  • Share class A

As of 29/04/2022