MARKET COMMENTARY

Having signalled forthcoming rate cuts for nearly two years, and failing to deliver, the Fed finally got “on message” and cut base rates by 0.5% (50bps) in September.

We have made two new additions to the fund over the last couple of months:
Spectra Systems; and
Rightmove.

In the last two commentary pieces, we said that the direction of stock markets has depended on two questions:
1)Whither the Magnificent Seven (or Fab Five)?
2) Have markets fully absorbed that the period of declining and/or ultra low interest rates are behind us?
Repetitious as it may be, but these two questions persist.

Fund performance for VECTOR in February was rather disappointing, with the fund down (3%). The two main detractors over the month were PZ Cussons and Reckitt Benckiser.

January was an unusually active month for trading within the VECTOR portfolio. Markets are better pricing the risks posed by inflation and interest rates and opportunities in the small and mid cap space are emerging. We are more confident of our ability to outperform than we have been for over a year.

It appears that the two most important questions for investors in 2024 relate to one micro question and one macro question:

So far this year, UK equity markets have been range bound, that is they have been trading within a relatively narrow band.

There will again be a day when equity and debt markets are not driven by the actions of central banks, but fifteen years after the global financial crisis we have yet to experience one (excepting the COVID crisis).

The last quarter was dominated by inflation and central banks’ response to it (higher interest rates).

April 20th 2023, marked the 7th Anniversary since the launch of the SORBUS VECTOR fund.

To the end of April 2023, the fund has returned 108.1% (an annualised return of 11.0%) with a volatility of 11.8%.

Another month, another banking crisis. Plus ça change, plus c’est la même chose.