November 2021
Activity
Our equity exposure was decreased in-line with our allocation process, maturing bond proceeds were re-invested and we added three new positions within the real asset’s strategy.
Transparency
At month end our net equity exposure was 23% and our bond duration was 3.0 years. We have exposure to three markets in the equity momentum strategy and remain active in eight other areas: Synthetic equity options, Global infrastructure, Renewables, Property, Corporate bonds (short dated), Government bonds, Alternatives and Opportunistic. We hold equity index options as upside and downside hedges.
Positive contributors
Investment Grade Debt +0.12%
Hedge Strategy +0.11%
Specialist Property +0.10%
Negative contributors
Renewable Energy -0.13%
Opportunistic -0.07%
Synthetic -0.05%
Corporate Highlights
Our real assets businesses announced 9 new acquisitions and 4 equity placings over the month. We had 2 one-to-one meetings with company management teams and 7 group investor meetings. One of our diversified economic infrastructure businesses announced the acquisition of a leading global data communications company, owning over 66,000km of subsea cable connecting North America and Europe to Asia. These are crucial assets used by blue-chip tech companies, telecom operators and media providers and benefit from long-term contracted cash flows underpinned by solid data demand growth. Elsewhere, one of our renewables businesses announced its intention to move into ‘controlled environment infrastructure’, which is set to play an increasingly important role in decarbonising sectors with strong alignment to COP26 pledges such as food & water and agriculture. Such corporate updates signal to us that our real assets businesses are favourably positioned for the structurally important sectors of the future.
Outlook
As we enter the final month of 2021, markets are grappling with the latest COVID-19 developments. The heavily mutated Omicron strain has prompted a number of countries to reintroduce restrictions on the public as governments and the scientific community race to analyse the emerging data, adapt the vaccines if necessary and accelerate booster programs. Elsewhere, the Fed chair Jerome Powell admitted to the senate banking committee that inflationary pressures in the economy might be more than transitory, paving the way for a faster rate normalisation cycle if economic conditions call for it. From a portfolio perspective, the fund remains very well positioned with a highly liquid equity strategy that includes upside and downside hedges, a short duration bond portfolio and a diversified portfolio of long-life real assets.