The behaviour of the markets in the final quarter of 2020 retraced, albeit with less intensity, their ups and downs over the year. The depression seen in October, against a background of a resurgence in the pandemic, gave way in November to enthusiasm driven by the approval of several vaccines. This trend continued, at a slower pace, through to the end of December, as investors found their appetite for equities over the final two months of the year enhanced by a series of vaccine approvals. The roll-out of these vaccines will finally allow markets to look towards a ‘post-pandemic’ world.
Following this rally, equity markets finished the year with surprisingly modest overall movements (+6.3% for the MSCI World net return, -3.3% for the EuroStoxx 600 net return and -5.6% for the CAC 40 net return) which mask the tumult seen over the course of the year, most notably the collapse in March whose main victims were the oil, banking, tourism, construction and telecoms sectors. Whilst the situation for these sectors has turned around since November, this appears to be because of the overall improvement in mood. This has been based on a mix of factors that have been widely discussed in recent months: massive fiscal and monetary support on both sides of the Atlantic, the resulting low interest rates, and, above all, the hope that vaccines will help re-establish confidence amongst economic actors, most notably consumers. In other words, a rapid return to a more normal economy. Figures from China in November pointed in this direction, showing increases of 7% in industrial production and 21% in exports, suggesting positive knock-on effects in the rest of Asia. In the USA, meanwhile, the USD900 billion stimulus package adopted on 20 December has raised hopes that the other key engine of the global economy will again run at full throttle. Lastly, in Europe, confidence indicators have risen, despite a fresh spate of lock-downs.
Over 2020, our management lagged somewhat behind the indices: the absence of US technology ‘stars’, the mix of defensive stocks with some that are more cyclical, and exposure to some stocks hit by the collapse in travel or in oil prices hit our relative performance since the onset of the health crisis. However, the latter have also enabled a rebound since November, and allow us to foresee further potentially favourable months in this new year. In ascending order of equity exposure, Clartan Patrimoine finished the year down by 3.7%, Clartan Évolution by 4.5%, and Clartan Valeurs and Clartan Europe by 12%. Meanwhile, Clartan Ethos has gained 10% since it was launched in September 2020. It seems reasonable to believe that the ‘gradual return to normal’ will see the prices of stocks that have held back the funds since February now make up lost ground. In an environment that is still full of uncertainty, we continue to believe that the balance within the compartments between ‘value’ stocks, which are still at a discount as they are highly sensitive to this return to normal, and those offering stronger growth and hence at higher valuations, provides a solid portfolio structure and allows us to be fully invested.