December 2021

Financial investors are heading into 2022 in optimistic mood.

With collective memory covering an ever-shorter period, this momentum is justified by the gains made on equity markets in December - the Stoxx600 was up more than 5% for the month alone - which contributed to the record rises seen in 2021.
It would seem that investors are expecting a more harmonious relationship between the pandemic and economic and social activity; either the virus will weaken its grip or the economy will withstand its persistence.
It follows that the dominant scenario does not include any worsening of the health situation. This is reflected in the International Monetary Fund’s forecast of global growth of nearly 5% in 2022, following around 6% in 2021. This expected growth is relatively well-balanced between different parts of the world (5.2% for the USA, 4.3% for the Eurozone and 5.6% in China).
One might, however, consider that the markets have completed their first phase of making up for lost time: this was driven by investors seeking to take refuge in what they saw as unsinkable plays, irrespective of the new scenario, at almost any price - or so it appears from the valuation levels reached by some such stocks, most notably European luxury goods and US technology stocks. This wave has driven markets to valuation levels that are now comfortable, particularly in the USA. It would need little more than a bigger than expected jump in inflation or increase in interest rates by one of our central banks to dampen hopes that these stocks will continue to drive the market’s rally and thus trigger a rebalancing of valuations between the most and least highly valued companies. The increased volatility of recent weeks bears witness to these questions. In all events, the interest rate question rules out investment in bonds, which the most defensive investors have increasingly avoided over recent years given non-existent yields and the risk of real capital losses. In the final analysis, equity markets will remain the focus of long-term savers, if only because of the limited interest of the bond alternative, particularly as they seek to create structural returns.

For Clartan’s funds, 2021 was a mixed vintage: all compartments put in positive performances, but the results were disappointing in relative terms as indices were driven upwards by a handful of their most heavily-weighted members whose market gains seem to have become uncoupled from their fundamentals, meaning they are overvalued and leading us to avoid them, despite their excellent performances.
Patrimoine gained 2.2% over the year, thanks to the equity allocation, which was increased during the period. Valeurs was up 9.6%, in line with its average historical gains, but this did not fully offset the 12.1% drop experienced in 2020.
Europe’s 13.5% gain was satisfactory as such, but it nevertheless lagged behind its benchmark. Lastly, Ethos closed its first full year with a significant gain of 16.8%.
The upturn for the compartments at the end of the year, and the return of investors to a more selective analytical approach after last year’s rally, advocate for our Quality & Value methodology to offer investors the best balance between risk and return across each of the compartments of the SICAV.














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