Market Summary
- Most markets at or close to 3-month highs, with the US in the lead and Europe and the UK slightly lagging
- Outperformance of momentum and growth has reversed relative to value and cyclicals over the past few days, as business conditions start recovering
- However, uncertainty around the sustainability of market recovery continues with a potentially intensifying US-China trade tension and rising unemployment figures
- Near or medium-term outlook remains fragile, with the belief that yields will remain low for the foreseeable future
Positioning Summary
Overall approach
- Trade off upside for downside protection
- Keep cash on hand to benefit from any opportunities
- Favour high quality, growth, and defensive stocks until market recovery confirmed
- No significant increase in Equity allocation due to enduring uncertainty. However, staying invested into stocks expected to perform well or even benefit from Covid, as well as in the longer term (Tech, US utilities…)
- Swapped short maturity bonds for same issuer’s longer-term debt securities to benefit from higher yields and higher capital gains potential
Contact
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41 & 43, Maddox Street
Mayfair, London
W1S 2PD
+44 207 0960 790
VAR Capital Ltd is a limited company incorporated in England and Wales with registration number 09159540. UK registered office 41 & 43, Maddox Street, Mayfair, London W1S 2PD. VAR Capital Ltd is authorised and regulated by the Financial Conduct Authority (FCA). Firm reference number 718558. VAR Capital is a trademark of VAR Capital Limited under the UK intellectual property regulation. Trademark number: UK00003429839
