The Covid-19 vaccination rollout continued to gather pace around the world over February. In the UK, Prime Minister Boris Johnson published the roadmap out of the country’s current lockdown, with June 21 the provisional date for the lifting of all final restrictions, including social distancing measures. Conversely, new restrictions were introduced in various countries in Europe, including Italy and Norway.
In the US, President Biden saw his $1.9 trillion stimulus package pass the Democrat-controlled House of Representatives, although whether it will pass in the Senate in its current form is less certain. The recent earnings season has almost come to a close and has, so far, been strong, with over 70% of the S&P 500 companies that have reported so far exceeding expectations of earnings.
Equity market returns over February were generally positive, with outperformance from Japan and North America, while Developed Asia Pacific ex Japan lagged in local currency terms. Developed markets outperformed emerging markets in general.
Both absolute and relative performance across our strategies was mixed over the month. Our Small Cap strategy, though positive in absolute terms, lagged strong benchmark numbers, while both our Global Income strategy and our external US Value strategy generated positive performance on an absolute and relative basis.
Prudential was a top performer for the Trust this month, with our overweight position at a fund level benefiting overall returns given the stock’s outperformance of the broader market over February. An underweight and zero exposure to Apple and Tesla, respectively, also contributed to relative returns, given the relatively poor performance of these two stocks. In contrast, an overweight exposure to Hoya (which performed poorly) detracted in February, as did a lack of exposure to Exxon Mobil.
All information as at 26 February 2021, unless stated otherwise.