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LCP Investment Summary November 2020
Posted on 1 December, 2020 by Administrator
Global equity markets rose 10.1% (in € terms) in November. Markets reacted very favourably to the progress of three potential Covid-19 vaccines from Pfizer/BioNTech, Moderna and AstraZeneca. With hopes that they may receive final regulatory approval by year-end, many governments began making plans for a possible vaccine programme in early 2021.
These developments also saw stocks that have suffered the most since last February performing strongly over the month, with investors now looking to the return of some degree of economic normality during 2021. Investors were also happy to see a decision in the U.S. Presidential election after the initial potential deadlock, and that the Republican-controlled Senate would counteract any possible corporate profit reforms planned by President-elect Biden. The appointment of Janet Yellen (ex-Federal Reserve Chair) to Treasury Secretary was welcomed, as it should lead to a more co-ordinated approach to both fiscal and monetary policies.
Longer-dated Eurozone bond prices fell 0.9% over the month, with the yield on the AAA Eurozone 15+ Year Index rising to -0.27% by month-end. The Euro Broad Sovereign 10+ Year Index rose by 0.2% with a yield at 0.31% at month-end.
Longer-dated AAA bond yields rose sharply after the Pfizer/BioNTech vaccine news but then fell for the rest of the month over the rising number of Covid-19 cases in Europe. However, the news on vaccine progress saw a rise in inflation expectations leading to a rise in prices for inflation-linked bonds. Corporate bond prices also rose over hopes that the vaccines will boost economic recovery and reduce potential corporate defaults.
Sample DC Schemes
The sample High and Medium Risk Strategies both rose due to their large holdings of growth assets