- 31 DecVector 2021 Annual Review
- 15 OctQ3 Review
- 17 AugChinese crackdowns
- 22 JulVector 2021 Semi-Annual Review
- 25 JunWhy we still like value
- 25 May'Transitory' Inflation
- 22 AprReversal to the mean?
- 17 MarVector's take on sustainable finance
- 09 MarSustainability-related disclosures in the financial services sector (SFDR)
- 19 FebDavid versus Goliath: An analysis of 2020 stock market performance
- 30 DecVector 2020 Annual Review
- 20 NovFactor momentum
- 20 OctHow will the US elections influence your portfolio?
- 25 SepAre better times for quant investing on the horizon?
- 26 AugFama/French going through its biggest drawdown since 1963
- 17 JulVector 2020 Semi-Annual Review
- 25 JunA Look At Post-Corona Market Valuations
- 25 MayUnprecedented times call for unprecedented measures...
- 23 AprVector's outlook on the Corona Crisis
- 13 MarMarket correction: sense or sentiment?
- 17 FebThe market and sector concentration
- 14 JanNotice to shareholders
- 31 DecVector 2019 Annual Review
- 17 DecFama/French going through its second biggest drawdown since 1963
- 15 NovThe Alpha Lifecycle
- 16 OctVector 2019 Q3 Review
- 10 SepA new prospectus
- 14 AugMarket Review: July
- 10 JulVector 2019 Semi-annual Review
- 14 JunAre factor premia disappearing?
- 21 MayHow persistent is regional outperformance?
- 12 AprMarket recovery: sense or sentiment?
- 12 MarMarkets solidify recovery
- 12 FebStock Markets Rebound
- 31 DecVector 2018 Annual Review
- 14 Dec2019 (outrageous) predictions!
- 20 AugTemperatures and stock markets heat up
- 18 JulVector 2018 Semi-annual Review
- 14 JunDo exporters suffer during trade wars?
- 15 MayStrong earnings put markets on the road to recovery
- 17 AprQ1 Overview
- 13 MarStock Markets: Episode VI: The return of volatility
- 02 MarVector wins Morningstar Germany and Belgium Awards!
- 22 FebVector Flexible wins De Tijd/L'Echo Awards for the third year in a row!
- 16 FebNavigator wins Morningstar France Award!
Vector 2021 Semi-Annual Review
22 Jul 2021
Dear investors,
Rising optimism about global growth drove markets substantially higher, with the MSCI All Countries posting a year-to-date gain of no less than 15.87%. Yet, there was a clear discrepancy between sector returns during the first and second quarter of the year.
This is - in part - due to the fact that treasury yields had initially rallied as investors feared that the reopening of economies and the rebound in activity would fuel inflation. As a result, sectors whose profits lie far ahead in the future, like information technology, suffered during the first quarter of the year. Banks on the other hand, whose profits often rise in tandem with the yield curve, were off to a good start in 2021.
Even though the market’s prediction largely became reality, as we saw the Consumer Price Index post significant year-on-year increases in both April and May, the rise in treasury yields came to an abrupt standstill near the end of March. In fact, bond yields came down substantially from their highs during the second quarter as the Fed signalled successfully that inflation would only be transitory. Consequently, sectors that did very well initially lagged the market considerably in the second quarter and vice versa.
While the macro-economic situation of the first quarter of the year was a tailwind for the model, which tends to invest more heavily in smaller and cheaper companies, it did suffer from the style-reversal during the second quarter. Nevertheless, we believe that the rotation from growth into value still has a long way to go given the historically low valuation of value - compared to growth stocks and the probability of future treasury yields increases outweighing the odds of further decreases.
Vector Navigator returned 19.1% during the first half of the year, beating its benchmark as well as 9 out of 10 of its Morningstar category competitors so far. Flexible also had a great first half, recording a return of about 10.4%.
Best regards,
Werner, Thierry & Nils
