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Following the first quarter’s pandemic-related plunge, global markets recovered strongly in the second quarter as countries began emerging from lockdown and returned to work. In this more constructive environment, the Fund gained 28.29% while the MSCI World Index recovered by 25.30%. Initial gains in the consumer staples and health care sectors were followed by a recovery in consumer discretionary stocks and the information technology sector.
In terms of the broader macro environment, the global economic resurgence from March’s lows has been almost as dramatic as its sharp deterioration in Q1. The widely followed purchasing manager index (PMI) has shown strength in both manufacturing and services on a forward-looking basis. In June it was reported that the manufacturing PMI increased by 22.0% to 52.6 from 43.1 in the prior month after tumbling by over 18% from February to April. Similarly, U.S. single family home sales increased by 16.5% from April to May, although sales remain below levels seen at the beginning of the year.
Progress has also been positive but slower on the employment front. The post-World War II record unemployment rate of just 3.53% suddenly spiked to a new high of 14.7% for the month of June – over four percent higher than the elevated level experienced in the depths of the 2008 Great Recession. At the same time, continuing claims for American unemployment insurance hit at an all-time high of 24.9 million in May. However, that number has been gradually improving as the economy slowly reopens.
The largest sector overweights in the Fund remain Information Technology and Healthcare. However, several holdings, such as Amazon, Facebook and Alphabet, while not officially considered Tech companies per se, are clearly enabled by advanced technology infrastructures and continue to thrive as disruptive, capital light entities.
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.
