Paul Niven – Market Snapshot

May 2021
Paul Niven

Paul Niven

Managing Director, Portfolio Manager and Head of Portfolio Management, Multi Asset Solutions


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During May, our net asset value (NAV) return was -1.0% and shareholder returns were -0.1%, in comparison to the FTSE All World Index return of -1.0%.

Vaccinations continued apace, allowing restrictions in various countries to be rolled back, including in England, where May saw the reopening of indoor hospitality. On the flip side, case numbers continued to increase in India, although the rate of growth appears to have slowed. Despite the positive trajectory, new variants that might reduce the efficacy of vaccines remain a key risk.

Fiscal support and the loosening of restrictions continues to support the economic recovery. Purchasing Managers Index (PMI) survey data for both services and manufacturing in the US was strong in May, and there were also positive readings in the eurozone. US corporate earnings for the first quarter of 2021 were also well ahead of consensus expectations. Nonetheless, strong economic data has given rise to increasing concerns over inflation, and the risk of central banks hiking rates earlier than anticipated in response. In the US, month-on-month inflation rose by 0.8%, above expectations, while in the UK, inflation rose by 0.6% month on month. It remains to be seen whether this inflation is transitory, as most expect, or more structural in nature.

Equity market returns over May were generally positive in local currency terms, with outperformance from Europe and Japan, while the US lagged on a relative basis. Emerging markets outperformed in general.

Both absolute performance and relative returns across our strategies were mixed over the month. Our emerging markets strategy performed very strongly in both absolute and relative terms, as did our Global Income and Japanese equity strategies. Our Global Small Cap strategy, though negative in absolute terms, generated strong relative returns versus the small-cap benchmark.

Hoya Corp 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 May. Underweights in both Apple and Tesla also benefited relative returns. In contrast, an overweight to poor performer Delivery Hero detracted in May, as did an overweight to Pigeon, the Japanese baby-care company.

We ended the month at a discount of 4.3%, having averaged a discount of 5.0% over May.

Covid-19 continues to have a drastic impact on nations around the world, with many still in some form of lockdown or under tightened restrictions, over a year after the first round of lockdowns were implemented in March 2020. The vaccine rollout is progressing at a remarkable pace in many countries, and while there is growing optimism over a return to some form of normality by summer, this is still far from certain. Countries and companies will continue to face many challenges, and it is likely that equity markets will have to navigate some aftershocks, both economic and virus related, over the coming months. Nonetheless, we have 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.

The Company is an investment trust and conducts its affairs so that its shares can be recommended by Financial Advisers to ordinary retail investors in accordance with the Financial Conduct Authority’s rules relating to non-mainstream investment products and intends to continue to do so.

The company is available for retail investors in the UK, professionally advised private clients and institutional investors who seek growth in capital and income from investment in global markets and who understand and are wiling to accept the risks, and rewards, of exposure to equities.

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