There have however, been shorter periods during which performance has fallen below our expectations but in the past the evidence shows that these brief periods of underperformance have been matched by strong recovery.
Unfortunately, 2020 was one of these periods as we struggled in the immediate aftermath of the pandemic’s emergence. The global lockdown and violent market reaction caused by COVID concerns was not something we expected or were positioned for. However, in sharp market sell off like this our experience told us not to panic and remain true to our process. We continued to reinforce the merits of our approach and while we did make some modest portfolio adjustments, maintained belief in many of our managers.
Why? Because we had conviction in their talent and approach, and in many cases were reassured by the latent value many felt was within their portfolios. It’s encouraging to see that faith beginning to be rewarded, especially among more value orientated funds that struggled for some time in an environment in which growth has dominated.
With the rollout of vaccines continuing apace across the UK and US, we think pent up consumer demand could well provide further impetus with confidence growing as we emerge from lockdown.