Updated: Nov 24, 2020
Factsheet: September 2020
The month of September was a month of consolidation for the US markets, with a obscured economic environment due to health risks and political uncertainties related to the upcoming elections: the S&P 500 lost 4.55%, the Dow Jones Industrials 3.02% and the NASDAQ 100 7.12%.
After several months of outperformance, technology stocks saw an expected catch-up effect, as reflected in the performance of the Nasdaq. This seemed healthy to us, in order to ease the feeling of overheating that had persisted since the end of August.
At the sectoral level, rotation continues as the technology sector (-7.69%) is in decline while the energy sector continues to drop back (-14.21%) to the the end of March levels. Conversely, raw materials (+4.28%) and discretionary consumption (+2.82%) are on the rise.
About the Fund
The fund has shown more resilience than the indices with - 2.69% compared to -4.55% for the S&P 500, allowing us to consolidate our long-term outperformance: after gaining more in the positive months, we are losing less in the negative ones.
Stryker surged ahead with a performance of over +10% for the month. This is mainly a natural catch-up effect, because of the deferred consumption of the brand's products (hip prostheses, for example) that could not be used during the overcrowding of hospital systems.
On the other hand, after an excellent month of August, Facebook lost 13.82%, mainly due to profit taking on the markets. For us, this is a great opportunity to strengthen our position in this company which, despite its controversial nature, offers an extraordinary valuation/growth mix potential with its network exceeding two billion users on Facebook and one billion on Instagram.
In spite of the market consolidation occurring this month, valuation levels on the S&P 500 remain high (25 times 2020 earnings on average) as a result of the initial stimulus package and the massive inflow of liquidity driven by the Fed's accommodating policy.
All attention is obviously on the U.S. presidential race.
For us, the main concern will be whether the governmental (presidency) and legislative (congress) agent bodies will be aligned or whether the Republicans will manage to keep their majority in the upper chamber (Senate), giving them a countervailing 'veto' power that could significantly limit the government's actions.
Despite these unknowns, we are not changing our investment approach, which has the advantage of not having to worry about or predict these events.As confirmed by the fund's performance since the beginning of the year when we had not anticipated the stress that would be caused by the pandemic.
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