Levitas Portfolio Review - April 30th 2021


Market Performance and Outlook

As in previous periods, market sentiment was dominated by the impact of Covid 19 on the global economy.  With some developed countries taking steps towards reopening, on the back of successful vaccine roll out, markets entered calmer waters in April.

Market attention has now turned to the prospect of inflation with some predicting that a surge in pent up consumer demand may be inflationary, fed by a hike in commodity prices and wages. Others expect business to be tentative around rehiring and restocking, pointing to a slower recovery. A mixed picture may be likely to emerge, as the vaccination programme success could be countered by new variants, resulting in a slower return to pre pandemic spending levels. This uncertainty has provoked more short -term volatility in markets.

Central banks appear to be willing to let inflation rise in the short term, without raising interest rates to counter it.  This policy is likely to benefit equities over bonds and shorter duration, index linked and high yield bonds over longer duration and investment grade bonds.

In an era of economic transition sharp swings between the returns from different asset classes and sectors are to be expected. Economies are reverting to “normal” levels of activity and longer-term trends, driven by changes in working patterns, climate change and so on are embedding. The portfolio manager maintains a preference for equity investment while ensuring a balance between growth and cyclical sectors is achieved. In such market conditions the benefits of diversification and ongoing governance are key to maintaining stable returns.

Levitas A

Levitas A achieved a strong absolute return over the recent period with performance ahead of the Investment Association Flexible Sector.

Growth stocks have outperformed more cyclical assets. Technology focused funds as well as smaller companies were the top performers. Despite having a bias towards less fashionable banking and oil stocks, the UK equity sector also performed well as investor confidence returned. Asian and Emerging markets underperformed, perhaps reflecting the relative impact of Covid 19 on those economies where vaccination and healthcare provision is less advanced.

Levitas B

Levitas B provided positive returns ahead of the Investment Association 0-35% sector.

The portfolios overweight position in equities contributed to the outperformance. Fixed income investments also made a modest recovery as fears of inflation receded.

Alternative investments made a positive contribution, in particular property investments gained ground on the back of economic reopening.

Convertible stock also continued to deliver as the rotation from fixed interest into equities, as a counter to potential inflation, benefits holders of convertible stock, who essentially hold an each way bet on the prospects for inflation and interest rates.

There were no significant changes in the portfolios over the last period and the portfolio maintains a preference for equity investment going forward.

You should remember that the value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

Brooks Macdonald

The information contained in this article is based on the opinion of Aspira Corporate Solutions and does not constitute financial advice or a recommendation to any retirement strategy, you should seek independent financial advice before embarking on any course of action.

A pension is a long term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Pension income could also be affected by interest rates at the time benefits are taken.

The tax treatment of pensions in general and tax implications of pension withdrawals will be based on individual circumstances, tax legislation and regulation, which are subject to change in the future.


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