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- 15 okt.Q3 Review
- 17 aug.Chinese crackdowns
- 22 jul.Vector 2021 Semi-Annual Review
- 25 jun.Why we still like value
- 25 mei'Transitory' Inflation
- 22 apr.Reversal to the mean?
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- 09 mrt.Sustainability-related disclosures in the financial services sector (SFDR)
- 19 feb.David versus Goliath: An analysis of 2020 stock market performance
- 30 dec.Vector 2020 Annual Review
- 20 nov.Factor momentum
- 20 okt.How will the US elections influence your portfolio?
- 25 sep.Are better times for quant investing on the horizon?
- 26 aug.Fama/French going through its biggest drawdown since 1963
- 17 jul.Vector 2020 Semi-Annual Review
- 25 jun.A Look At Post-Corona Market Valuations
- 25 meiUnprecedented times call for unprecedented measures...
- 23 apr.Vector's outlook on the Corona Crisis
- 13 mrt.Market correction: sense or sentiment?
- 17 feb.The market and sector concentration
- 14 jan.Notice to shareholders
- 31 dec.Vector 2019 Annual Review
- 17 dec.Fama/French going through its second biggest drawdown since 1963
- 15 nov.The Alpha Lifecycle
- 16 okt.Vector 2019 Q3 Review
- 10 sep.A new prospectus
- 14 aug.Market Review: July
- 10 jul.Vector 2019 Semi-annual Review
- 14 jun.Are factor premia disappearing?
- 21 meiHow persistent is regional outperformance?
- 12 apr.Market recovery: sense or sentiment?
- 12 mrt.Markets solidify recovery
- 12 feb.Stock Markets Rebound
- 31 dec.Vector 2018 Annual Review
- 14 dec.2019 (outrageous) predictions!
- 20 aug.Temperatures and stock markets heat up
- 18 jul.Vector 2018 Semi-annual Review
- 14 jun.Do exporters suffer during trade wars?
- 15 meiStrong earnings put markets on the road to recovery
- 17 apr.Q1 Overview
- 13 mrt.Stock Markets: Episode VI: The return of volatility
- 02 mrt.Vector wins Morningstar Germany and Belgium Awards!
- 22 feb.Vector Flexible wins De Tijd/L'Echo Awards for the third year in a row!
- 16 feb.Navigator wins Morningstar France Award!
Vector 2021 Annual Review
31 dec. 2021
Dear investors,
Despite several severe covid-waves due to the Delta and towards the end of the year Omicron variant equity markets rallied wih 27.5% in 2021. In Euro-terms the United States was helped by the appreciation of the USD and as a result the region had another amazing year compared to Europe and especially Emerging Asia, which suffered severely under Beijing's crackdown on technology companies and the real-estate crisis.
While the year started of very promising for value stocks and small caps, this reversed later on due to a comeback off large growth stocks. As a result, the dispersion of returns of different investment styles was relatively muted and most factors ended up within a couple of percentage points from one another as well as the broad equity market. The sole exception was ‘momentum’: after outperforming the market by an impressive 14.7% in 2020, the factor reversed during the year as last year’s winners generally became 2021’s laggards. Consequently, the investment style underperformed the market by 11.2% during the year.
When looking at the up- and down capture ratios of the different investment styles over the past two years we see an interesting reversal pattern: while growth and momentum tended to be styles everyone fled to in 2020 when markets fell, in 2021 value and low volatility stocks were the safe havens of choice.
2021 |
ACWI VALUE |
ACWI GROWTH |
ACWI MVOL |
ACWI MOMENTUM |
ACWI SMALL |
Up-capture |
85% |
115% |
68% |
116% |
102% |
Down-capture |
61% |
138% |
39% |
178% |
114% |
2020 |
|
|
|
|
|
Up-capture |
94% |
106% |
55% |
101% |
120% |
Down-capture |
119% |
83% |
74% |
77% |
119% |
The table above shows how much of the benchmark (MSCI ACWI) the different style indices captured during up- or downwards markets. (i.e., when the benchmark increased by 1% in 2021 value stocks only gained 0.85%, but when the benchmark fell by 1% value stocks only fell by 0.61%)
While the stock selection functioned quite well in 2021, our overweight in Asia detracted from our performance. Overall, Vector Navigator ended the year 27.53% higher – a performance exactly in line with the benchmark. As most commonly considered factor indices underperformed their parent index, this is a satisfactory result for a multifactor approach to investing as the end result was greater than the sum of the parts. Vector Flexible earned a return of 10.96% during the year, beating about 2/3rd of our Morningstar category competition.
Looking forward to 2022, we are mildly optimistic: a booster shot seems to be effective against the mutations in the Omicron variant and as more and more antiviral pills are being produced it is unlikely that markets will experience a similar selloff as we have seen in the past. Yet, the virus coupled with a rising CPI and more hawkish central bankers might also make it much less likely that we will see double digit gains any time soon.
Best regards,
Werner, Thierry & Nils