Posted by Alae ZitouniFebruary saw the markets marked by President Donald Trump taking a sledgehammer to convention and finesse. Investors now more than ever, are left with the gruesome task of deciphering fact from fiction from negotiation tactic. While initially investors were upbeat about pro-business and pro-markets Trump returning to the Oval Office, the new administration started the month with the threat of blanket tariffs against Canada, Mexico and China. As is customary and expected, all three countries promised to respond with tariffs of their own, heightening the likelihood of a trade war and officially seeing ‘tariffs’ displacing ‘inflation’ as the de rigueur word of the moment. Nevertheless, such protectionist policies can severely slow global growth and compromise the USA’s position in the world. Some signs are already showing such as slipping consumer confidence and house sales. The month was also marked by Trump’s handling of foreign affairs such as the Middle East but especially with Ukraine, with an Oval Office meeting with President Zelenskyy that could only be described as shambolic. The US markets closed the month down – 1.42%. An unlikely winner for the month was Europe, pleasing investors having skirted Trump’s tariff wrath (for now). More importantly, an American administration acting erratically against its closest allies, withdrawing US support for Ukraine etc has opened many eyes as to what alliances can be relied upon and which not, consequently sending Europe on a path of defence spending spree benefitting European companies. Providing further tailwind, is optimism towards a potential ceasefire in Ukraine, opening a path for a peace deal. A stop to hostilities would be a clear win to Germany for example which has seen crippling energy prices owing to the war. European Markets closed the month with a 3.34% gain. Back in the UK, the BoE cut rates by 0.25%, not without a word of caution from the Governor regarding the threat of return of inflation, amid heightened uncertainty around the world. The Prime Minister was more upbeat celebrating the little wins as GDP skirted contraction territory, and an unremarkable (thankfully!) meeting with Trump. The prospect of a trade deal being signed and increased pressure for higher defence spending has also propelled the UK market higher, logging a 1.57% gain. Against this backdrop, the fund logged a 0.22% gain
February being the portfolio’s second biggest month with regards to Autocalls, it should be no surprised that the month saw a large amount of rolls, with 6 positions maturing – one paying out a 16.6% coupon. The heightened levels of volatility were taken advantage of, locking in advantageous terms. Despite all the new positions, buffers remained excellent with a 49.7% average buffer to capital preservation, with the worst performing position still enjoying a 43.2% buffer.
Fund Performance – B Class Institutional
| YEAR | JAN | FEB | MAR | APR | MAY | JUN | JUL | AUG | SEPT | OCT | NOV | DEC | FY |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2018 | – | 0.54% | 0.34% | 2.32% | (0.07%) | (0.44%) | 0.77% | (0.47%) | 0.95% | (0.86%) | (0.02%) | (2.96%) | 0.11% |
| 2019 | 4.15% | 0.55% | 1.21% | 0.41% | (0.78%) | 1.47% | 0.96% | (1.71%) | 0.98% | 0.08% | 0.60% | 0.51% | 8.66% |
| 2020 | (0.52%) | (5.37%) | (10.93%) | 7.10% | 5.31% | (0.32%) | 0.42% | 3.18% | (0.03%) | (2.14%) | 6.09% | 0.40% | 1.76% |
| 2021 | (2.88%) | 0.91% | 4.13% | 1.81% | 1.02% | 0.22% | 0.04% | 1.00% | (1.00%) | (1.68%) | 1.51% | 2.80% | 8.33% |
| 2022 | (1.09%) | (0.20%) | 0.25% | (1.05%) | 1.47% | (3.69%) | 3.57% | (2.85%) | (6.02%) | 4.76% | 5.55% | (0.54%) | (0.50%) |
| 2023 | 4.50% | 0.61% | 0.02% | 0.98% | (0.82%) | 1.36% | 1.39% | (0.67%) | 1.00% | (1.33%) | 2.63% | 2.36% | 12.55% |
| 2024 | 0.31% | 0.62% | 0.83% | 0.48% | 0.47% | 0.14% | 0.89% | 0.58% | 0.12% | (0.78%) | 0.83% | (0.08%) | 4.49% |
| 2025 | 2.39% | 0.22% | – | – | – | – | – | – | – | – | – | – | 2.62% |
Commentary
January 2025, Manager Commentary