Income Generation / Total Return

7% p.a., net of fees

Daily

Luxembourg-regulated AIF

30 April 2020

Beauclerc Limited

Manager comment

Global equities suffered another brutal correction in June, ending H1 2022 with the worst performance since 1970: S&P500, Euro Stoxx 50 and MSCI EM all declined approx. 20% since January 1st, while the Nasdaq dropped by 30%. Cryptos literally collapsed as well as US non-profitable tech stocks. The FOMC was the main catalyst of the June market breakdown, as the Fed announced that 75bps rate hikes would now be envisaged going forward, until US inflation starts showing signs of weakness. As a result, investors feared the risk of policy error, starting to consider the recession scenario in DM economies as an indirect effect of this tighter Fed guidance. Their concern shifted suddenly from inflation to growth, with the latter already showing signs of weakness in the US/EU. Corporate earnings have started to be revised down, with the risk to be washed out should the scenario of a deep recession becomes central, hitting mostly cyclicals and financials. By contrast, US big tech showed more resilience later in the month. Going forward, part of the solution remains with Central Banks with an eventual softening of their hiking cycles. Commodity prices have already reversed as a result of the rising recession risk, which should trigger an earlier reversal in inflation. As the growth agenda will become centre stage, the ECB might be dissuaded to confirm more than a couple rate hikes in 2022, while the Fed could soon temper its aggressive rhetoric. Bonds markets have already priced in these changes in guidance, expecting now rate cuts in the US as early as H2 2023. As a result, DM sovereign bond yields dropped by almost 50bps late June, helping to release the pressure on US big tech valuations. The equity outlook will remain clouded as long as the soft landing scenario is challenged by hawkish DM Central Banks. But if there is no recession, then equities are too cheap.

The Fund suffered a setback ending June with -2.5% YTD return. The brutal equity correction mid-June occurred when several volatility-income notes expired, generating unexpected capital losses. Reinvestments helped restoring the residual downside protection of the structured notes allocation, raised to 12.4%. Meanwhile, 14% of the Fund remain invested in structured notes with no downside protection left and the Fund’s running income is 7.2% p.a..

YTD

  • Cumulated Performance
  • Share class A

As of 30/06/2022

3 months

  • Cumulated Performance
  • Share class A

As of 30/06/2022

1 year

  • Cumulated Performance
  • Share class A

As of 30/06/2022

3 years

  • Cumulated Performance
  • Share class A

As of 30/06/2022

All

  • Cumulated Performance
  • Share class A

As of 30/06/2022