Live life to the fullest, and focus on the positive – Matt Cameron, American musician

Live life to the fullest, and focus on the positive – Matt Cameron, American musician

Monthly management comment

Macro & Politics: “ We all wish for a brighter and happier 2021”

The past year was probably one of the most challenging years of our lifetimes. Who could have predicted such a pandemic, the confinement of the world population and the complete standstill of large parts of the global economy? We now enter the new year with great hopes but still impregnated by a dismal environment. The health crises have brought into light various social and political antagonisms. The world has rarely been as cleaved as it is today. The currents crisis exacerbates differences between social groups: some such as civil servants or workers in specific industries have preserved their income; others like small entrepreneurs have suddenly lost all their revenues. The government and central banks activism has helped the happy few with Equity portfolios to achieve large capital gains while average citizens are struggling to keep some savings. Let us hope that these imbalances will fade away with as we swiftly cope with the Covid-19.

Markets & Investment decisions: “ A great investment year, moving towards a reflation game ”

In the US democrats managed to gain 2 seats in the recent Georgia election, allowing them to take control (by the least possible margin) over congress. This result should allow them to launch their ambitious and expansionist monetary program with the probable consequence of confirming recent trends such as rising bond yields, a weakening USD and sector rotations from “stay at home” to financials and oil or from growth to value. The Aulien Fund had solid year delivering a close to +3% return while the Eurostoxx 50 was down -5.1%. It also managed to tame its volatility despite dramatic and unseen market shifts. 2020 was definitely a year in favour of active asset allocation and stock picking allowing them to achieve significant outperformances vs passive and benchmarked strategies. Our 15% allocation to mainly Scandinavian stocks delivered an average return of 26% over the year.

Ideas and wishes for the new year:

It is always very difficult to predict markets but we do keep a “positive/cautious” stance towards equities despite a perhaps overly bullish consensus. The persistently loose monetary policies should persist and keep TINA and FOMO in the drivers seat. One should be aware of the risks related to the created “Zombies” by such environment but eventually the health crisis will fade away allowing the “old and normal” economy to somehow resurge from its ashes.
Financials and commodities will probably continue to turn-around and will benefit from favourable relative valuations. In this changing world, all different kind of technologies will continue to attract investors. The Green transition will come into force at the EU level, and will also favour some “old” energy companies who managed to anticipate and take advantage of these changes. Finally, in the midst of the current gloomy UK situation, we feel that the worse is probably behind us and that British assets could show some interesting opportunities.
As always, we take this opportunity to greatly thank our faithful investors for their very valuable trust. We wish them as well as all our supporters and friends a very happy and prosperous 2021!

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