Factsheet: October 2020
The month of October has been volatile and uncertain. While the poll predicted a clear victory for Biden, the last moments of the campaign were full of uncertainties, leading to high volatility and a sharp market decline at the end of the month. Investors got also influenced by the deterioration of the pandemic and have massively decreased their market exposure and have sought refuge in options and other structured products.
In this context, the U.S markets went through a considerable correction: the S&P 500 and the Dow Jones Industrials were down by 3.28% and 4.73% respectively. The untouchable technological sector was not immune to this situation and saw the NASDAQ 100 dropping by 4.58%.
As for the sectors, the rotation continues since this month, it was the car manufacturers that enjoyed a strong growth with a 14% increase, whilst home building sector corrected significantly with a 12.91% decline, despite a significant resilience since the beginning of the year.
About the Fund
The fund demonstrated greater resilience compared to the indices with a decline of only 1.89%, thus consolidating its overall outperformance.
We benefited in particular from the excellent performance of Waters (14.87%) and Automatic Data Processing (ADP), which was up by 11.18%. ADP, which produces one out of every six pay slips in the United States, has obviously been affected by the historic rise in unemployment following the pandemic, but this pioneer in the technological sector, which has been through the 2000 stock market bubble and the 2008 crisis, seems to be perfectly prepared and well managed to get through this new market squeeze.
On the other hand, S&P Global, the rating agency, is down by 9.40% over the month. We essentially attribute this correction to profit-taking following an extraordinary year for this stock which was up by more than 30% before this recent correction.
If the U.S presidential election seems to be behind us, we still have to wait for the special Senate elections which will take place in the State of Georgia in January 2021. Even if the Democrats win, they would still only control the Senate by the smallest of margins.
There are therefore many uncertainties about the new government's ability to act, and particularly regarding the magnitude of a potential fiscal stimulus plan, which is absolutely necessary in light of the damages inflicted to the U.S. economy by the second wave of coronavirus infections.
Despite these uncertainties, we maintain our investment philosophy, which has the advantage of being immune to these sporadic macro-economic events with unpredictable repercussions. This is illustrated by the performance of the fund since the beginning of the year, which has outperformed all indices without requiring major arbitrages despite the tumultuous context.
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