Global equities delivered their worst quarterly performance since the European sovereign debt crisis as uncertainty stemming from inflationary concerns, tightening central bank policies, and rising recession risk weighed on markets. The Altrinsic Global Equity portfolio declined 10.9% during the second quarter, outperforming the MSCI World Index’s 16.2% decline, as measured in US dollars. Outperformance was derived from all major industry exposures except real estate, materials, and utilities. We take no consolation in our relative outperformance during this painful drawdown. Near-term macro data and corporate earnings will likely be disappointing, but we are confident in our positioning and encouraged by the investment propositions offered by a growing number of companies with strong long-term fundamentals and attractive valuations.
The Altrinsic Global Equity portfolio declined 0.1% during the first quarter, outperforming the MSCI World Index’s 5.2% decline, as measured in US dollars. Just as most nations began lifting COVID-related restrictions and returning to normal, tensions intensified amidst surging inflationary pressures, tightening policy measures in the US, lockdowns in China, and Russia's invasion of Ukraine.
Beginning with the January insurrection at the US Capitol and ending with the rapidly spreading Omicron COVID-19 variant, 2021 provided much for markets to digest. Nonetheless, equities continued their rise with support from re-opening economies, strong corporate earnings growth, and stimulative monetary and fiscal policies. This strength continued during the fourth quarter led by US equities (+10.0%) and “growth” stocks, while non-US (+2.7%) and emerging markets (-1.3%) lagged.
The Altrinsic Global Equity portfolio declined 0.7% during the quarter, compared with the 0.0% return of the MSCI World Index and the 1.1% decline of the MSCI All Country World Index, as measured in US dollars. Strong performance by our financials holdings was offset by weakness among health care and communications investments that lagged due to uncertainties stemming from COVID-19 and China.
Equity markets delivered strong gains in the second quarter, aided by continued policy stimulus, robust economic and corporate earnings growth, positive sentiment stemming from fewer global COVID-19 cases, and a supportive interest rate environment. Large cap “new economy” stocks led the markets in Q2 given the supportive interest rate environment, while health care stocks advanced on softening political rhetoric and positive new drug discoveries.
Equity returns were strong in the first quarter, supported by positive economic and corporate earnings revisions that offset the negative impact of rising interest rates. The Altrinsic Global Equity portfolio gained 6.1%, as measured in US dollars, compared with the MSCI World Index’s 4.9%. The most significant market developments were a continued rotation into cyclical and leveraged equities, a surge in commodity prices (S&P GSCI +14.2%), increased inflation expectations, and negative returns for bonds (FTSE WGBI -3.2%).
Global equity markets delivered strong gains during the fourth quarter with the Altrinsic Global Equity portfolio and the MSCI World Index both returning 14.0%, as measured in US dollars. As shown in Charts 1 and 2, the strong narrow leadership by highly priced technology stocks that prevailed during most of the year gave way to a rebound in deep cyclical and lower quality businesses during the fourth quarter as encouraging vaccine developments spurred optimism about a return to normal life and improving economic conditions. Financial markets continued to be bolstered by unprecedented amou
Equity markets delivered solid gains during the third quarter, propelled by significant upward revisions to corporate earnings prospects, low interest rates, and a US Federal Reserve policy announcement suggesting that interest rates will be kept low for the foreseeable future. COVID-19 case counts remain elevated and economic conditions generally remain pressured, but recent data has been trending better than consensus expectations. As stock markets appear to be discounting further economic improvement, they continue to be led by a small group of highly-valued "new economy" stocks that a
The Altrinsic Global Equity Composite gained 14.6% during the second quarter. By comparison, the MSCI World Index gained 19.4% as measured in U.S. dollars, led by U.S. equities (S&P 500 +20%) and richly valued tech stocks (NASDAQ +30.6%). Measures to reopen economies, increased optimism surrounding a vaccine, and hopes for a V-shaped recovery have been supportive, but the primary driver of the rally in risky assets has been the announcement of extraordinary fiscal and monetary stimulus, amounting to 29% of global GDP (Table 1).
The first quarter of 2020 was one of the worst on record, and it certainly felt like it. In a matter of weeks, a virus that likely emerged from a wet market in Wuhan, China, brought the global economy to a halt. A Saudi-Russian induced oil price war exacerbated the decline. Only cash, select government bonds, and gold provided refuge from the carnage. There is tremendous uncertainty in the near term, as policymakers inject wartime stimulus into economies, creating a bridge until health risks subside and economic activity recovers. Opportunities are emerging amid the associated uncertai