Global Allocation / Total Return

7% p.a., net of fees

Daily

Luxembourg-regulated AIF

Beauclerc Limited

14 December 2011

27 May 2014

MS Management Services SA

Manager comment

December ended 2019 on a historical top for most equity markets. Unusually, bonds also posted strong returns in 2019 driven by the decline in long bond yields and credit spread tightening following the collapse of equity volatilities in Q4. Major central banks confirmed at their December meetings that they will keep injecting liquidity in the system in Q1, keeping DM yield curves flat and allowing high asset-class valuations to prevail for longer. Investors consensus now focuses on the absence of macro downside risk, tame inflation, no change in expansionist monetary policies and modest corporate earnings growth. Q1 2020 macro data should corroborate these expectations, with a moderate rebound in manufacturing activity that would keep inflation forecasts under control, providing central banks with flexibility to adjust their guidance at their late January meetings. However, given the multiple rate cuts / QE packages implemented in the G3 economies in H2 2019, a stronger recovery in the global economic cycle and the return to an above-trend global growth shall not be ruled out by late Q1 2020.
A new synchronised expansion cycle similar to 2017 would make the actual monetary policy support unnecessary, triggering a severe re-steepening of DM yield curves, led by the sudden uncertainty about central banks’ reactions to this new trend. Also, the squeeze in US profit margins seen in 2019 would carry on into 2020, limiting the upside in earnings forecasts. Despite improving earnings, it would not be sufficient to prevent equity valuations from being at risk, especially versus bonds. We believe this risk could materialise in late Q1 2020, around March central banks meetings. In the meantime, the “stage 1” trade deal to be signed soon between the US and China shall include a roll-back in tariffs hikes, providing a welcome boost to international trade. In the coming weeks, investors shall focus on this event, sending equities to new historical highs before the valuations bubble will be considered.

YTD

  • Cumulated Performance
  • Share class A

As of 30/04/2020

3 months

  • Cumulated Performance
  • Share class A

As of 30/04/2020

1 year

  • Cumulated Performance
  • Share class A

As of 30/04/2020

3 years

  • Cumulated Performance
  • Share class A

As of 30/04/2020

All

  • Cumulated Performance
  • Share class A

As of 30/04/2020

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