Monthly Review – March 2023
OUR PERSPECTIVE
For a long time we have believed that the consequences of monetary and financial largesse, and more specifically, the swift reversal of these, will ultimately be the cause of the next crises.
In our opinion, many of the issues we now face, including the cost-of-living crisis, the boom-and-bust of crypto-mania, the excessive leverage burdening the global financial system and the failure of SVB/ Signature Bank, are all either direct or indirect outcomes of irresponsible fiscal and monetary policies over the last decade, if not longer One can even argue that Credit Suisse is an outcome of ever-lower cost-of-capital and poor controls combined with capitalist greed!
Our fear is that Central Banks feel obliged to reverse direction in fighting inflation too soon, and re-start policies which once again create moral hazard. That said, we believe inflation is likely to fall throughout this year, and that the coming battle relates to ensuring that overly rapid tightening of monetary conditions doesn’t break anything. Well… cracks have shown up. Tread carefully!
EQUITIES
Equity markets were generally weak in March, with ‘Growth’ equities outperforming ‘Value’ equities as fears of market fragility rose following the failure of several banks. Long duration, cash flow growth and quality outperformed – with the market viewing mega tech as higher quality. We retain exposure to these large cash-flow generators with attractive structural opportunities.
FIXED INCOME
Treasury markets in the UK and US rallied as bond markets reacted to the failure of SVB, Signature Bank and Credit Suisse on increased concerns that liquidity would be affected. We retain our overweight to Government bonds. Given our views on inflation, we retain exposure primarily towards nominal bonds, but we also have some shorter duration inflation linked bonds given the uncertain outlook. With regards to credit markets, we do not believe markets are pricing risk efficiently, and remain underweight credit.
REAL ASSETS
We remain underweight property given prices do not reflect the significant re-pricing of interest rates and of weakening demand. On the other hand, we remain positive on the outlook for infrastructure, especially in the renewable and digital infrastructure space.
Within the commodity complex, whilst positive on the longer-term trends, the near term the risk of an economic downturn could put further pressure on already weak commodity prices, and we remain underweight. That said, Gold has been the best performing asset YTD, with especially strong performance in March. We retain a significant overweight position in Gold…
SPECIALIST STRATEGIES
Specialist strategies continue to play a significant stabilising role within our portfolios. Managed futures had a difficult March however, as the rapid change in sentiment and spike in volatility caught many on the wrong side of the trade. We retain conviction in Managed Futures, especially the managers we’re invested with!
CURRENCIES
Generally, we remain neutral on currencies. The USD dropped following the backstop announcement, but we will have to wait and see whether it is short-term weakness or a new trend. We remain positive on the Japanese Yen, which we believe is both undervalued and under-owned, with potential catalysts for a revaluation higher.
CONTACT US
For further information on any of our services, or if you would like to arrange a meeting with an investment manager to see how we can work with you, please get in touch.
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Important information
Shard Capital Partners LLP is a limited liability partnership, registered in England with registration number OC360394. Shard Capital Partners LLP Registered office: Floor 3, 36-38 Cornhill, London, EC3V 3NG. Shard Capital Partners LLP is authorised and regulated by the Financial Conduct Authority in the United Kingdom, reference number 538762.
This document is provided for information purposes only and is intend for confidential and sole use by the recipient. It is not to be reproduced, copied or made available to others. The information set out in this document does not constitute investment advice or a personal recommendation. The views expressed in this document are not intended as an offer or a solicitation, to purchase or sell any security or other financial instrument, credit or lending product or to engage in any investment activity.
Past performance is not a guide to future performance. It is important that you understand that with investments, your capital is at risk. The value of investments, as well as the income derived from them, can go down as well as up and investors may get back less than the original amount invested. It is your responsibility to ensure that you make an informed decision about whether to invest with us, based on your particular objectives. If you are still unsure if investing is right for you, please seek independent advice.
The information and opinions expressed within this document are the views of (the company) and are based on information we believe to be reliable, but we do not represent that they are accurate or complete, and they should not be relied upon as such. Any information provided is given in good faith but is subject to change without notice.
No liability is accepted whatsoever by (the company) or its employees and associated companies for any direct or consequential loss arising from this document.
Disclaimer:
This document is provided for information purposes only and is intend for confidential and sole use by the recipient. It is not to be reproduced, copied or made available to others. The information set out in this document does not constitute investment advice or a personal recommendation. The views expressed in this document are not intended as an offer or a solicitation, to purchase or sell any security or other financial instrument, credit or lending product or to engage in any investment activity.
Past performance is not a guide to future performance. It is important that you understand that with investments, your capital is at risk. The value of investments, as well as the income derived from them, can go down as well as up and investors may get back less than the original amount invested. It is your responsibility to ensure that you make an informed decision about whether to invest with us, based on your particular objectives. If you are still unsure if investing is right for you, please seek independent advice.
The information and opinions expressed within this document are the views of (the company) and are based on information we believe to be reliable, but we do not represent that they are accurate or complete, and they should not be relied upon as such. Any information provided is given in good faith but is subject to change without notice.
No liability is accepted whatsoever by (the company) or its employees and associated companies for any direct or consequential loss arising from this document.
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