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Multi-Asset – CIO Monthly View – December 2020

Thursday, December 03, 2020

CIO Monthly View with Will Bartleet, CIO and multi-asset portfolio manager at Pacific Asset Management

Equity markets rallied sharply in November as positive news of a COVID-19 vaccine lifted sentiment. The market was driven firstly by the US election, which despite not being resolved over the night of the 3rd of November due to mail-in ballot counting, led to Joe Biden being declared president elect. The second key driver for markets over the month was the announcement of the results of phase 3 trials for the coronavirus vaccines from Pfizer/BioNTech, Moderna and AstraZeneca.

All results showed efficacy in treating the virus; the Moderna and Pfizer results were particularly strong, showing upwards of 90% effectiveness in trials of over 30,000 participants each. Over the course of the month, economic indicators continued to point to positive growth, albeit at a slower rate, with some of this being attributed to second lockdowns. Unemployment in the UK crept up to 4.8%, from 4.5% previously.

The results of vaccine trials caused not only strong equity market returns, but also a rotation within markets, as the expectation of a re-opening of economies helps sectors most affected by lockdowns such as travel, retail and energy. Equity markets in the UK and Europe were the strongest performers of the major regions, with the US underperforming other equity markets, due to the technology sector being the laggard over the month. Within the portfolio, positions in value equity holdings performed very strongly this month, benefitting from their significant valuation discount to the wider market.

In fixed income markets, UK gilts sold off marginally over the month, as an increase in growth prospects led to higher bond yields. Emerging market bonds generated strong returns as investors cheered a more rational US President which should be supportive of global trade and emerging market assets. Finally, alternative investments were mixed with global listed real estate rallying whilst gold gave back some of its gains.


IMPORTANT INFORMATION: Issued and approved by Pacific Capital Partners Limited, a limited company registered in England and Wales, authorised and regulated by the Financial Conduct Authority. The information contained herein is not approved for use by the public and is only intended for recipients who would be generally classified as investment professionals. Information or opinions contained in this article do not constitute an offer to sell or a solicitation, or offer to buy, any securities or financial instruments or investment advice or any advice or recommendation in respect of such securities or other financial instruments. Where past performance is shown it refers to the past and should not be seen as an indication of future performance.

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