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December 2020 Portfolio Management Team Update

Home News & Commentary December 2020 Portfolio Management Team Update
Elvis Picardo

Elvis Picardo

Market & Economic Environment

Global equities posted their best-ever monthly gains in November, with the MSCI All-Country World index up by a record 11.3%. Risk appetite rebounded as positive news about three vaccines’ efficacy in preventing Covid-19 (greater than 90% in the case of the Pfizer-BioNTech and Moderna vaccines) triggered a massive rotation into stocks that would benefit as economies returned to normalcy. Equities trended higher over the month despite an alarming surge in cases of Covid-19 worldwide. Investors were also undaunted by President Trump’s refusal to accept the results of the presidential election.

The TSX recovered from two successive monthly declines with a 10.33% gain in November, its best monthly performance since April. Index gains were led by the health care (+35.0%), energy (+18.6%) and financial (+16.3%) groups, with the materials sector the only one of the TSX’s 11 groups to finish lower in the month. The S&P 500 rose 10.75% while the Nasdaq Composite advanced 11.80%, the best performance for both indices since April. The Dow Jones Industrial Average surged 11.84% for its biggest monthly advance since 1987.

(Data Source: FactSet)

Our Strategy

Markets have rallied strongly on optimism that 2021 will be a much better year than 2020 thanks to a confluence of positive factors. These include a gradual return to normal times as large sections of the population in many countries receive one of the Covid-19 vaccines; favourable monetary and fiscal policy conditions; and declining U.S. political uncertainty as President-elect Biden transitions into the White House.

Our decision to rebalance all client portfolios on the eve of the U.S. presidential election turned out to be a timely one, as we had added to positions in value stocks and other securities that had lagged the broad rally since March. The rotation that commenced in earnest on November 9 – when Pfizer’s Covid-19 vaccine results spurred the biggest outperformance of value stocks over their growth counterparts in at least two decades – has continued so far this month, a trend that should favour our client portfolios.

While the Portfolio Management Team (PMT) is optimistic that 2020 will end on a strong note, it remains vigilant for buying opportunities triggered by tax-loss selling. The PMT also reiterates its comfort level with the positioning of client portfolios, which are well balanced with both cyclical and growth securities, as we head into the 2021 recovery year.

Please contact any member of the PMT if you have any questions or concerns regarding your accounts.

This information has been prepared by Luft Financial. Opinions expressed in this article are those of Luft Financial only and do not necessarily reflect those of HollisWealth®. Furthermore, this does not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors.

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