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Fisconsult Fund Newsletter - Nov 2020

Newsletter - Fisconsult Fund Management

November 2020

Dear Investors,

November witnessed an unexpected market turnaround. Indeed, announcements earlier this month, from Pfizer, then Moderna, confirming the development of effective vaccines against Covid-19, were extremely beneficial for the indices: the S&P 500 gained 9.65%, while the European stock markets soared with an 18.61% increase for the Euro Stoxx 50 and 17.67% for the CAC 40.

Moreover, concerns about the U.S. presidential election, the results of which have not yet been accepted by the departing president, were once more marginalised. Albeit in a different context, we have to go back to the best days of the dot-com bubble, in early 2000, retrace such remarkable monthly performances of the European Markets.

Despite a second wave of the pandemic that is still raging in most developed countries, markets have now anticipated a rapid return to normal once the vaccines would become available on a large scale to the general public, by the beginning of next year. Finally, some good news to end year 2020, a year that will be remembered as one of the most surprising in a long time.

In view of the impressive nature of this market rebound, we feel that it is important to highlight that it was boosted by 2 factors:

  • Firstly, by the massive liquidity injections made by central banks in the markets, that remain the main refuge for investors in this low or even negative interest rate environment.

  • Secondly, by a sharp rise in the sectors that had so far suffered the most from the negative impact of Covid-19.

Thus, in Europe, stocks such as Unibail-Rodamco (+70%), Renault (+57%) or Société Générale (+43%) have experienced historic rebounds, dragging the indices in their wake, but still not enabling their relative sectors (real estate, automobile, banks...) to return to pre-crisis levels.

Indeed, even after these huge rebounds, most of these securities remain in negative territories for the year. Unibail-Rodamco, remains at a YTD performance of -58% needing another 300% recovery to compensate for the -75% loss in value...

Given that we take little or no exposure to these troubled sectors, this technical rebound has marginally benefited the stocks in our portfolio. In our previous newsletters, we informed you of this likely sector rotation, which would be accompanied by profit-taking in resilient sectors, and we are therefore not surprised by this month of rallying for the most distressed stocks, even if the speed at which this has happened is quite rare.

We are therefore not going to change our approach by buying stocks with crumbly fundamentals and uncertain future prospects, even if some of them could benefit from further catch-up effects. As in the Tour de France, the winner doesn't need to win all the stages.

Our FFM American Growth fund gained 8.51%, in November whilst FFM European Selection gained 3.20%.

However, these positive performances trailed the indices which were boosted by sectors we do not invest in as per our investment philosophy, thus moderately reducing our large YTD performance of the indices in both Europe and the United States.


Fisconsult Fund Management

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