Hello, this is Jeremy Richardson from the RBC Global Equity team here with another monthly update. And what an interesting time in markets it has been. Although October was a negative month for global equity markets, I’m pleased to say that the strategy was able to perform reasonably well, protecting investors from all of that market deterioration and reporting a positive month.

But the really interesting thing I just really want to sort of remark upon is how the prevailing market narratives have been shifting so markedly over the course of the last sort of week or so. As we exited October, it very much seemed to be the case that the market was looking forward with some degree of confidence to what some people were saying was a blue wave. Senator Biden was pulling ahead in the polls from President Trump, anticipating, I think, for many investors that we would get certainty removing the risk of a contested election and making people, I think, align themselves with some of the policy agenda that was being put forward by that candidate.

So in particular, prospects of a $2 trillion infrastructure spending plan that would favour things like industrials and some basic materials type stocks and instead steering clear of things like health care and technology where it was felt the Democrats would want to investigate and perhaps reregulate those industries with a high degree of attention.

However, when we saw the results of the election we found that the pollsters got it wrong again and that instead of a blue wave, it was more of a blue wave goodbye, in that we’ve had this sort of—still a split Senate, which really I think investors considered meant that we would get policy stasis. You know, we would not get the big policy moves, the Senate would not agree with it. So out the window went that $2 trillion infrastructure plan and with it the trades in favour of industrials and basic materials and instead back into health care and technology companies investors went.

That lasted for just a couple of days before we then got the new news that Pfizer and BioNTech, a health care company from Germany, had come up with a vaccine for the coronavirus which looks to be 90% effective. If this passes its efficacy, its safety tests, then it’s potentially a game-changer, and mean that for 2021 it will be safe for us now to look at sort of holiday brochures again. We can think about getting on airplanes, we can think about meeting friends, families, and loved ones, you know, and that’s great news for everybody. But it also means that this bifurcation that we’ve been seeing over the course of much of 2020 in the market, what some people have been calling a k-shaped recovery with COVID-immune business models do really well on one hand and any business model which involves people meeting people, restaurants, hotels, gambling, that sort of thing, these business models have really been under pressure.

And so the prospects of a vaccine changes all of that narrative. Now, we’ve seen in the last couple of days, a switch around, an inversion of that sort of coronavirus trade, so to speak. And it’s met to quite a lot of disruption in equity markets. And I think it’s remarkable how in the space of just a matter of days we’ve had three market narratives switch around on us like that. And I think it speaks to just how dangerous it can be sometimes to try and pick narratives, pick themes, pick sectors consistent with what one might think is the prevailing market mood but which can sort of change very, very quickly based upon exogenous offense.

As you know that we’re much more comfortable not falling into that potential trap and instead trying to build portfolios where it’s the companies in the portfolio that will be driving the performance. And those of you who’ve been following us closely will know that we haven’t done a lot of trading over the course of the summer. We have very much stuck with a lot of those business models in the portfolio that haven’t enjoyed such a strong period because they’ve evolved aspects of the business, people meeting people. So traditional retail, hospitality, and so on. And by golly, we were pleased that we had them in the portfolio still when we had this market rotation over the last couple of days or so because they provided us with a lot of protection from a lot of the rotation and market volatility that we were seeing. So I think a really good example of why it pays to have risk management and robust portfolio construction when one enters a period of choppy markets.

I hope that’s been of interest and I look forward to catching up with you again soon.