Levitas Portfolio Review - May to July 2021


This quarter saw a slow start for both Levitas A and B, with both funds performing below their benchmarks. June was a strong month, with Levitas A significantly outperforming the IA Flexible sector and Levitas B also delivering good returns ahead of the IA 0-35% sector. Both funds finished the quarter in positive territory.

Asset class performance
The quarter started with strong performances from the UK and Europe with value focused funds outperforming as the market continued to swing between growth and value. This was offset by declines in technology and growth focused funds. Asia and Emerging Markets also struggled in May, over fears that a monetary surprise in advanced economies such as the US could lead to capital repatriation and a subsequent hit to these economies. International assets were hit generally by a weakening US Dollar.

In June, surprisingly hawkish comments from the US Federal Reserve (Fed) led to investors believing that central banks may be less tolerant of inflation than previously thought. This led to underperformance from assets that were positioned with this reflation narrative in mind. The US dollar was driven higher which benefitted funds with US assets and growth stocks such as technology staged a strong recovery. More defensive fixed interest such as sovereign debt generally underperformed, as did areas such as property.

Global equities were little changed in July as investors were unsettled by new Delta variant of COVID 19 as well as concerns over inflation. The majority of equity positions eked out modest gains over the month and the portfolios enjoyed reasonable returns from areas such as thematics, smaller companies and European equities. However, these modest gains were offset somewhat by declines in Asia and Emerging Markets which had a particular impact on Levitas A. Chinese equities in particular came under pressure as investors worried about regulatory crackdown on a number of key sectors, while Asian and Emerging Markets countries were affected by fears over potential further lockdowns and political issues.

Positioning and outlook

Markets remain fixated on inflationary data. In May, US Consumer Price Index inflation came in well above expectations while UK Consumer Price Index data contained few surprises, with inflation rising to 2.1% in May in line with expectations. This led to pressure on growth stocks, although this dissipated somewhat in the second half of the month as other data such as initial jobs reports were more benign. One of the difficulties in predicting UK inflation is that, in addition to the complex demand and supply dynamics all countries are facing, there have been significant movements in sterling over recent months, as Brexit risks ebbed and flowed

This year is expected to be one of transition, as policy makers adjust their monetary and fiscal tools away from a pandemic-state of unprecedented support, and towards a new post pandemic-state, likely characterised by prudence, moderation and relative retrenchment. Moving between these two states is unlikely to be smooth, uninterrupted or uniform across countries, and unintended policy error remains a risk for investors. This transition risk reminds us of the need for balance in portfolios between growth/defensive and value/cyclical investment styles which is likely to be prove pragmatic and sensible.

Fund activity

In May tweaks were made to reduce some of the currency hedging being carried out on US positions in both portfolios which proved beneficial as the US dollar weakened and Sterling strengthened. In June the main change was to sell Lindsell Train UK in favour of more value biased alternatives to ensure balance was maintained in the portfolios’ respective equity exposures. The manager also sold out of a UK corporate bond fund that had become increasingly reliant on mortgage backed securities to generate yield. These will likely be hit hard if rates do rise sooner than expected. This was replaced this with a short duration bond fund that should provide some protection from unexpected central bank moves and there were no major positional changes to the portfolios over the month of July.

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.


Back To List

Submit a comment

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.


Auto-enrolment? We can help
Get in touch with Aspira