- It's been a rocky month for markets as Covid-19 cases rise, particularly in the Asia Pacific region.
- This month’s report targets some trusts which have seen discounts widen.
- The Alpha IT report strategy’s long-term record since mid-2004 boasts a near 10-fold return.
Having started 2021 in jubilant form, markets seem to be finding it ever harder to make headway. Market leadership has flip-flopped between themes, such as value and growth, with little real commitment. Meanwhile, nervousness is increasing that the Delta variant of Covid-19 may start to run amok in countries that dealt with the virus well last year.
The concern about the spread of the Delta variant was a major issue for one of the themes that emerged in last month’s report: trusts focused on Vietnam. With Covid-19 cases in the country rapidly increasing, the domestic stock market has fallen. That weighed on the overall performance of last month’s ten stock picks with the selection underperforming the MSCI World index, although the portfolio did outperform the FTSE All Share.
A factor in the strength of the MSCI World index against last month's picks was a fairly noteworthy weakening of sterling against the dollar. This may reflect nervousness about rising Covid-19 cases in the UK. The relative strength of the MSCI World means a number of the UK-focused reports from earlier in the year are also now underperforming that index..
Still, all the 10 trust selections continue to outperform the FTSE All Share. And with this report having now run for a full year, the overall results from the trusts highlighted appear to be pretty good in general.
Fortunately, my data also suggests that while the Alpha strategy does sometimes have hiccups, overall it produces much more value from good calls than it loses from bad ones.
Over the last 17 years, the cumulative total return stands at 878 per cent based on mid-year reshuffles. That compares with 483 per cent from the MSCI World index and 229 per cent from the FTSE All Share. These performance numbers do lack some realism, though, as they do not account for dealing charges associated with the reshuffles. If I factor in a notional 1.5 per cent annual charge to represent dealing costs, the total return drops to 645 per cent.
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