In a sense, they were spot on. This is pretty much what happened.
The global number of active coronavirus cases rose from 11.7 million to 18.2 million. That's an increase of 56 per cent in but one month. In the Nordic countries, the number of active cases rose by 86 per cent, with Sweden leading the way. And, yes, further lockdown measures were instituted in several countries, likely to harm growth, at least in the short run.
Then there was the US election. In terms of numbers, the outcome was crystal clear (a margin of close to seven million votes and 74 electoral votes), but the presumably lame duck insisted the election was rigged, challenging his opponent's victory through filing lawsuits on a grand scale. There's in fact a Wikipedia page on both pre-election and post-election lawsuits.
If you were to evaluate the market one month ago, there is no way you could ignore these factors. So, honestly, would you have recommended your clients to increase their allocation to stocks and corporate bonds? Would a bit of clairvoyance on these points have made it better?
Well, you should have. For the MSCI World Index, measured in local currency, this was the best month since January 1975. For global high-yield bonds, spreads fell by one percentage point or more. For our unitholders, in both equities funds and fixed income, this was a month for rejoicing.
Of course, news of a possible vaccine in the not too distant future changed the game – even if this, too, was a distinct possibility one month ago.
The moral of this month's story? Short-term timing is notoriously difficult – if not downright impossible.
Finn Øystein Bergh
Chief Economist & Strategist
Historical returns are no guarantee for future returns. Future returns will depend, inter alia, on, market developments, the portfolio manager’s skill, the fund’s risk profile, as well as fees for subscription, management and redemption. Returns may become negative as a result of negative price developments. This is marketing communication.