Following the US presidential elections in November, the Senate run-off in Georgia resulted in a surprise Democrat win, ultimately giving the party control of the Senate in addition to the House. We also saw protests and the storming of the US Capitol by supporters of the former President, Donald Trump, convinced that the election results were fraudulent. Despite this, the inauguration of President Biden went ahead without incident and without crowds, as Covid-19 restrictions kept people away.
Covid-19 has resulted in more near-term economic pain, as restrictions in many countries were once again tightened due to rising case numbers. On the positive side, the vaccine rollout has continued to gather pace, with the UK announcing at the end of the month that it had completed 598,000 vaccinations in one day, equivalent to almost 1% of the population. The vaccination effort has been far from smooth everywhere, however, with supply disruptions resulting in vaccine trade war threats from the EU to the UK.
Equity market returns over January were mixed, with outperformance from emerging markets while Europe ex-UK lagged in local-currency terms. Developed markets lagged emerging markets in general, with the broad global index slightly negative in local-currency terms. Both absolute and relative performance across our strategies was mixed over the month. Our emerging markets strategy posted positive absolute returns but lagged strong benchmark numbers, while our global income strategy outperformed on both an absolute and relative basis.
Tencent was a top performer for the Trust this month, with our position benefiting overall returns due to the stock’s outperformance of the broader market in January. Positions in TSMC and Hong Kong Exchanges and Clearing also contributed to relative returns. In contrast, Global Payments performed poorly and detracted in January, as did our holding in Prudential.
We ended the month at a discount of 6.6%, having averaged a discount of 6.3% over January.
Countries and companies will continue to face many challenges. It is likely that equity markets will have to navigate some aftershocks, both economic and virus related, over the coming months. Nonetheless, F&C Investment Trust has a tremendous advantage through our corporate structure which makes us well placed to withstand further market volatility. As always, we remain focused on the long-term opportunities, for the benefit of our shareholders.
All information as at 29 January 2021, unless stated otherwise.