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During the first quarter of 2021, global equity markets continued to rebound off last year’s lows. In Q1, the LOM Equity Growth Fund gained 8.23%, comparing favorably its stated benchmark, the MSCI World Stock index which advanced by 4.64%. Top performing sectors included Energy (+22.40%), Financial Services (+13.24%), and Industrials (+7.92%.)
Since the beginning of the year, global economies have continued to show signs of progress, bouncing off last year’s pandemic-induced recession. Key indicators such as ISM manufacturing, consumer spending, and new jobs ticked up in the first part of the year, although activity remains somewhat pressured due to renewed lockdowns and vaccine distribution delays in many regions.
As the new quarter begins, more positive trends are evolving, fueled by the massive government relief package recently passed, improving consumer sentiment, and a better employment picture. The latest Labor Department report showed U.S. employers added the most jobs in seven months with improvement across most industries as more vaccinations and fewer business restrictions stoked a labor market recovery. Nonfarm payrolls increased by 916,000 last month and February employment was revised up to a 468,000 gain as the unemployment rate fell to 6%.
On a global basis, the world economy is expected to grow by 5.6% in 2021 after an estimated real global GDP decline of 3.5% in 2020. The recovery is expected to stretch into 2022, with real GDP growth of 4.1% according to the Bloomberg consensus economic forecasts. Positive trends are expected to be made in the months ahead as the stimulus payments lead to increased consumer activity, accelerated business re-openings, and further declines in layoffs. That combination should produce faster GDP growth by midyear and especially in the second half. Still, expectations should be qualified by the uncertainty of the virus and inconsistency in dealing with the pandemic on a worldwide basis.
Meanwhile, optimism has expressed itself in the markets through what is being called the reflation or reopening trade. For example, we have seen more movement to the previously unloved value and smaller companies which had been largely left behind during the preceding years. The Fund continues to look for opportunities in these and other areas of the market.
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The information contained in this article is for information purposes only, and represent the views of the author. It is not intended as specific investment or financial advice, or a recommendation or solicitation to buy or sell any security. Any investments or strategies listed in this article may not be suitable for all investors. Past performance is not indicative of future performance, and as with any investment, prices may fluctuate. It is recommended that advice is sought from a qualified investment professional prior to implementing any financial plan. LOM has made every effort to ensure that the contents herein have been compiled from sources believed reliable, however LOM does not warrant the accuracy, adequacy, timeliness, or completeness of this information expressly disclaims liability for errors or omissions in this information.
