Portfolio Managers Comment - September 2021 – Fixed Income – MAC AM CREDIT SELECT UCITS

Portfolio Managers Comment - September 2021 – Fixed Income – MAC AM CREDIT SELECT UCITS

 

Our Fixed Income management based on the primary market generated a performance of 0.35 % in September, bringing the net performance of the fund to 4.29% since inception on January 04th, 2021).

 

 

September was an opportunity to reshuffle the cards with stock market indices generally down in Europe and the United States and disparate in Asia. Rates rose sharply in September, with the 10-year US at 1.513, the 10-year UK at 1.041, the 10-year German at -0.204 and the 10-year French at the end of the month at 0.158 inching in positive territory.

Unlike the symposium held at the end of August which was fairly light in terms of direction announcements, central banks around the world communicated more incisively in September. Indeed, the Fed said it is ready to reduce its asset purchases and raise its rates in the very near future, potentially as soon as the end of 2021 if the American economic situation improves and inflation persists coupled with a difficulty for companies to hire. The ECB adopted a smoother speech while following in the footsteps of the FED calling for a "smooth tapering".

Around the world, some central banks have already opted for a rate hike, such as in Norway, Korea or Brazil, a sign of a desire to normalize their policies to prepare for the post-covid period. In England, Andrew Bailey is leaning more and more towards a rate hike for his institution.

Following the speech of central banks, companies are trying to issue their debt securities fairly quickly in order to benefit from the current favourable financing conditions, which remain uncertain for the months to come.

In Germany the Social Democrats won the elections beating the Conservatives. The new government hopes for a coalition with the Greens and the Liberal Democrats reassuring investors of Germany's pro-Europe stance.

In the Eurozone, inflation reached a record level over the past 13 years in September.

In the United States, discussions around raising the debt ceiling seem to be taking time with a deadline which is fast approaching, thus risking destabilizing the world's leading power.

In China, it is the real estate sector that has faltered, in particular with the giant Evergrande, which suffers from serious liquidity and solvency problems, failing on certain payments. The scenario of a Lehman Brother bis, however, does not seem to be relevant today due to potential buyers and a Chinese government determined to contain the shock.

The dollar appreciated strongly against the euro, settling at 1.15815 in late September.

Concerned about the rather uncertain short-term developments and the renewed volatility on the markets, we decided to reduce our duration at the first signs to 3.25 (3.81 at the end of August). This precaution has paid off, allowing us to get through the extreme variations that have taken place in the market. We have therefore reallocated part of the portfolio towards a selection of Investment Grade securities with short maturity in order to benefit from a low correlation to rates and a security effect, in particular through the use of short government bonds on the markets. developed. Volatility stood at 1.47% (up from 1.49% in August). Our dollar exposure benefited from the currency effect. We are prepared to further risk exposure reduction at the start of October to take the time to observe the market, maintain performance and reposition ourselves as markets become more stable.

 

Benefit from this strategy

To benefit from this strategy in your investments, you can freely subscribe to our UCITS1 Fund started on January 04, 2021.

A UCITS Fund like ours offers a strict regulatory framework in terms of transparency as well as protection of capital and clients. The strategy analyzes the economic environment as a whole, identifies and adjudicates market opportunities on primary and secondary market with the aim of generating absolute performance uncorrelated from the markets.

EUR Share Class : LU2095273590

USD Share Class : LU2131342482

For more information, do not hesitate to visit the dedicated page or to contact us directly.

P: +44 (0)20 3750 9971

M: info@mac-am.co.uk

  1. Investment vehicle regulated for the purpose of investor protection, liquidity and transparency.

 

 

 

Image : https://unsplash.com/photos/8bjnP3yhNTg - Florian Wehde