European economy¬†¬† is expected to have another recessionary quarter due to the ongoing lockdow ns. ECB announced more support and that helped equity markets to perform handsomely during the month of March.
In the US, indices reached¬†¬† new¬†¬† highs¬†¬† as¬†¬† grow th¬†¬† expectations¬†¬† are¬† high due to¬†¬† the massive fisca l and¬† monetary stimulus. The contrast comes from China, w here the economy¬†¬† is doing better than anyw here else, but the central bank has reduced policy¬†accommodation and¬† w arned of some bubbles that are¬†forming. Thus, Chinese equities continued the correction, w hich reached 15% from¬†¬† the highs seen in February.
Big divergencies betw een countries regarding the vaccine rollout as w ell as economic measures will keep show ing through activity data. Expectations of a big rebound in activity once vaccination rates improve is the focus of investors, which keep ignoring any bad news.
We keep seeing this market priced for perfection, but we¬† cannot help to see some ‚Äúnot so certain‚ÄĚ outcomes regarding¬† vaccination, herd immunity, household behavior or investor¬īs leverage and global debt, amongst others.
Contribution from closed trades during March w as 2,5%, w hich brings the total for¬†¬† the year¬† to 5,7%. Portfolio remains¬† defensively¬†¬† positioned. Thus, we keep having negative correlation to risk assets. Even as ‚Äúrisk on‚ÄĚ mood remains, the model is taking advantage of the very few movements in our favor. Protection levels remain high. This means that performance w ill be substantial w hen prices turn around¬† in our favor. We do not know w hen it will happen, but we know it w ill at some point.
Meanw hile, risk management is w orking very well, and we remain patient. Rotation remains high within the portfolio. Most notable changes are in USD, w here we have gone from +86% exposure to a lmost fla t. CAD w ent form slightly long to -63% exposure and CHF long exposure increased to +72%. Currently¬†¬† the model is show ing¬†¬† 23 pairs w ithin¬†¬† our¬†¬† universe of 28 w ith information¬†¬† ratios better¬†¬† than¬†¬† 20% annualized¬†¬† in¬†¬† a w ell diversified set of combinations. By construction, as we only trade eight currencies, there is a lot of decorrelation among the different opportunities.
Below we show you the October cards of all our funds.
As always we remind you that we are at your disposal for anything you may need.
This document is provided for informational purposes only and cannot be considered in any case as a contractual element, a recommendation, personalized advice or an offer. Nor can it be considered as a substitute for Key Information Document (KID) or any other mandatory legal information that should be consulted prior to any investment decision. In case of discrepancy, the legal information prevails. All this legal information is available at the offices of Grantia Capital SGIIC, SA and on its website: www.grantiacapital.com