Global equity markets had a generally positive period mainly driven by the concerted global vaccine approval announcements and roll-out which, was implemented with varying degrees of success.
In the US, this positive sentiment was further amplified by the confirmation of President’s Biden fiscal stimulus package of 1.9 trillion dollars coupled with an additional promise of 2 trillion dollars in infrastructure spending. Markets were temporarily spooked by the unusual highly targeted trading activity executed by coordinated retail investors who were executing a short squeeze on some very large short positions held by hedge funds, one company that garnered significant media attention on this matter was Gamestop.
In the Eurozone, equity prices were buoyed by the shared hope of global economic recovery. The Pan-European vaccination program was marred by vaccine roll-out delays and the controversies surrounding the efficacy and safety of the vaccines, namely the one supplied by AstraZeneca, prompting various governments to halt the vaccination programs pending further testing. This move raised fears on the effect of delaying achieving herd immunity on greatly weakened economies, particularly those dependent on service industries such as tourism. Notwithstanding this, the flash manufacturing purchasing manager’s index for March reached a record high of 62.4, signalling strong growth.
Global bond yields rose, meaning prices fell, with corporate bonds outperforming government bonds. Such steepening of the yield curve indicates rising growth expectations.
Merill Total Return Income Fund
Share Class 30/03/2021 31/12/2020
Accumulator (EUR) 0.5613 0.5577
Distributor (EUR) 0.5240 0.5218
As at 30 March 2021, the fund had €39.95 million in assets under management. The fund kept on the positive momentum of the previous quarter. The equity portion produced the lion’s share of the positive return and more than offset the decline in bonds. The shift towards an overweight investment grade and underweight government bonds produced the desired results as the former outperformed the latter. The characteristics of this fund highlight the importance of diversification and mixed allocation between bonds and equities.
Merill High Income Fund
Share Class 30/03/2021 31/12/2020
Accumulator (EUR) 0.5253 0.5199
Distributor (EUR) 0.4633 0.4619
GBP Hedged Distributor (GBP) 0.5036 0.5020
As at 30 March 2021, the fund had €59.52 million assets under management. With an expected yield curve steepening, we have reduced the interest rate risk by reducing the investment grade bonds allocation and shifting it towards high yield bonds, as the latter are less sensitive towards such risk. Similar to the previous quarter the Fund’s underlying equity exposure produced the lion's share of the positive return.
Merill Global Equity Income Fund
Share Class 30/03/2021 31/12/2020
Accumulator (EUR) 0.5791 0.5395
Distributor (EUR) 0.5642 0.5261
As at 30 March 2021, the fund had €15.83 million assets under management. The fund’s rebound kept its momentum and produced a healthy positive return for this quarter. Most of the sectors ended in positive territory however, the main sector contributing to the upside was once again the cyclical one. During this quarter we continued to add in selective equities namely in industries that retain an edge in this environment and continued to increase those sectors with an ESG focus.
Merill Strategic Balanced Fund
Share Class 30/03/2021 31/12/2020
Accumulator (USD) 1.0095 1.0403
As at 30 March 2021, the fund had $28.99 million assets under management. We have increased the global equity exposure and favoured sectors such as info technology, cybersecurity and other sectors that may benefit from the world’s shift of focus, in favour towards clean energy. From a duration perspective, we have reduced sovereign duration risk by shifting towards better yielding investment grade corporate bonds and high yield bonds.
This document is issued by Jesmond Mizzi Financial Advisors Limited (JMFA) as Managers of Merill SICAV plc. JMFA (IS30176) of 67, Level 3, South street, Valletta, VLT 1105 is licensed to conduct investment services business under the Investments Services Act by the MFSA of Triq l-Imdina, Zone 1, Central Business District, Birkirkara, Malta and is a member firm of the Malta Stock Exchange. Merill SICAV plc is incorporated and licenced as an open ended collective investment scheme, registered in Malta, qualifying as a Maltese UCITS with effect from the 16th October 2015. This document does not intend to give investment advice and the contents therein should not be construed as such. The directors or related parties, including the company, and their clients are likely to have an interest in securities mentioned in this document. Past performance is no guide to future performance and the value of investments may fall as well as rise