Equities continued to rebound from their middle of March lows during April. On a sector basis, technology, materials, consumer discretionary and healthcare led the way up whilst energy continued to be a significant laggard. 

Coronavrius cases surged to over three million cases globally but news flow in Europe improved somewhat, with a flattening in virus curves in some of the worst affected countries. The huge economic impact of a continent-wide end-of-quarter lockdown was reflected in eurozone Q1 GDP data which recorded a 14.4% fall quarter-on-quarter. The hope remains that activity will have troughed in April before recovering as gradual lockdown easing is hopefully enacted. The IMF predicted that the great lockdown recession will be the worst since the Great Depression, forecasting global GDP to contract by 3% in 2020.

US stock markets were particularly strong during the month despite initial jobless claims at 6.9 million, aided by further Federal Reserve support via the provision of US$2.3 trillion in credit through new lending facilities. Additionally, the Fed widened the available assets for its Asset Purchase Programme (APP) to include both high yield bond and ETFs. The ECB also changed its rules to accept ‘fallen angel’ bonds and further eased capital requirements for European banks. 

News flow from China signalled further progress on the re-opening of manufacturing plants and mobility relaxations. Chinese Q1 GDP had contracted by 6.8%. The oil price rose early in the month after the OPEC+ agreement to reduce supply by 9.7mbpd, but was thereafter very weak given massive oversupply and lack of storage capacity. This caused West Texas Intermediate to even temporarily trade at negative levels. Bond yields continued to be very weak, with 10-year German Bund yields falling further 11bp to -50 bps, whilst the spread with Italy increased further after a lack of progress on the EU Commission’s Recovery fund.

The Fund outperformed over the month, helped by strong stock picking. Our healthcare names performed well, with good contributions from AstraZeneca, Fresenius Medical Care and Bayer. Just Eat Takeaway.com rebounded over the month as first quarter numbers confirmed better than expected trading resilience amongst the restaurant shutdowns. Thales was weak over the period, a combination of sub-sector weakness, particularly on the civil side, which Thales is only marginally exposed to, and concerns that defence budgets may be cut in coming years. 

We established a new position in Akzo Nobel. We expect the business to normalise fairly quickly after the end of lockdown and the ongoing margin potential can further improve returns. Balance sheet strength may also allow for further share buybacks later in the year.  

Data shown net of fees, net income reinvested. Please note that fund performance is shown against the MSCI Europe ex UK NR 12pm adjusted. Data for the period 5 November 2001 to 31 December 2012 is shown against the FTSE Eurofirst 300 ex UK TR Index. Performance of other share classes may vary and is available on request. Where shown, monthly returns table shows compounded discrete monthly performance. During the period  5 November 2001 to 7 May 2003 the performance record is based on the pre-existing share class that had a higher management fee.

Past performance is no guarantee of future performance. The value of an investment and the income from it can fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested. The Funds investment include shares in small-cap companies and these tend to be traded less frequently and in lower volumes than larger companies making them potentially less liquid and more volatile.