Income Generation / Total Return
SOFR O/N + 3% p.a., net of fees
Daily
Luxembourg-regulated AIF
30 April 2020
Beauclerc Limited
Income Generation / Total Return
SOFR O/N + 3% p.a., net of fees
Daily
Luxembourg-regulated AIF
30 April 2020
Beauclerc Limited
This website contains information about Beauclerc Limited and Beauclerc Advisory Services Limited whose services are only available to Professional Clients in the United Kingdom. The information contained in this website is provided solely for use by such Professional Clients, their representatives and advisers, and is not intended for members of the general public.
The services described on the website are being provided by Beauclerc Limited which is licenced and regulated by the Guernsey Financial Services Commission and therefore protections under the UK Financial Services and Markets Act (FSMA) are not available such as, but not limited to, the dispute resolution protection and access to compensation schemes. This website is neither an offer nor a solicitation to buy or sell any investment referred to herein. Past performance is not necessarily an indication of future investment returns. Exchange rate changes may cause the value of overseas investments or investments denominated in different currencies to rise or fall. The information and opinions in this website have been recorded by Beauclerc in good faith and from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness or correctness. Beauclerc accordingly accepts no liability whatsoever for any direct, indirect or consequential loss arising from the use of this document or its contents.
On 26 May 2011, the rules about cookies on websites changed. In common with most websites, Beauclerc uses cookies which can be essential to operate this site and might already been set. Cookies are small files saved on your computer that are used by websites for purposes such as recording your site settings, preferences, etc.. You may delete and block all cookies from this website, but parts of the website might not work or be accessible. By clicking ‘I Agree’ you also agree to the use of cookies on this website.
If you have read and understood these conditions of use, you may click the ‘I agree’ button to proceed. By doing so, you acknowledge that you understand the conditions of use and agree to abide by them.
Manager comment
The correction in global equities that started in February intensified severely early April, as the S&P 500 declined 20% from its peak in February, before bouncing back mid-April. At the end of April, EU equities remained the YTD outperformer amongst DM indices. D. Trump marked his first 100 days in office with the weakest US stock market performance since R. Nixon. Tariffs announced on April 2, coined as Liberation Day, triggered a period of extreme market stress last experienced during the Covid crisis. Also, Trump threatened to fire the Fed’s chairman, urging an immediate rate cut to counter the negative effect of tariffs on economic activity. This shock to the US economy and to the Fed’s independence caused an unusually dangerous episode of simultaneous US equity weakness, higher US Treasury yields and weaker USD, ultimately forcing D. Trump to postpone reciprocal tariffs to all countries for 90 days, except China. Also, to stabilize the USD and US Treasuries, Trump made an explicit statement that he had no intention of removing the Fed Chair. These reversals sparked a much welcome technical rebound in global equities, further boosted by strong earnings from US mega-caps.
Looking ahead, US recession risk hinges on potential US trade deals with Japan, Korea and India offering some hopes of tariffs de-escalation, while negotiations with China look more pedestrian. In the meantime, the 10% universal tariffs shock will work its way through the US economy. Survey data for April are unambiguously dire, with consumers' expectations and manufacturing new orders and investment intentions all plunging. As inflation will surge in the short term, it looks unlikely that the Fed prioritizes growth and employment by cutting rates preemptively in May. Monetary support should be effective in H2. The recovery in equity indices seems to be near its peak, as headwinds will intensify in the coming months. However, equity markets should not revisit their early April low.
The Fund was down -0.4% (A, USD) in April, but maintained a positive YTD gain. The significant spike in equity volatility early April triggered few portfolio adjustments to contain the Fund’s sensitivity to equity markets, realizing some mark-to-market losses. Since mid-April, the equity market rebound restored the downside protection while the Fund was fully invested, with the earliest maturity of income notes in June. As of 30/04, the Fund’s running yield was at +10.9% p.a. (USD, gross) with +14.9% downside protection of the income notes allocation and 3.7-month average maturity.