November will go down in the history books as a pivotal moment in our lifetime. The announcement of not one, but three highly successful vaccines for Covid-19 is a game-changing moment.

Yes, things are likely to be challenging for a few months ahead, and there are a number of hurdles to jump; regulatory approval, manufacture and distribution, however, these are likely to be overcome in the coming weeks and months.

We can now see light at the end of the tunnel. We, therefore, believe that as 2021 progresses life will return to normality. As this happens confidence will return to both individuals and corporates and economic growth is likely to break records in 2021 – bouncing back from low levels in 2020.

It is for this reason that risk assets bounced strongly in November, and those areas most impacted by the Covid-19 lockdown environment, for example, travel & leisure, bounced strongly from extremely depressed valuations. Whilst we are positive and have increased our overall exposure to equities – we are not positive in all areas and still have a disciplined quality-based approach. This is because a vaccine does not stop the trend, we have some in recent years of the move away from traditional retailers to online. The market backdrop clearly accelerated this in 2020. Another consequence of this is that we remain very selective on the commercial property exposure held.

It’s not often that a major event gets more attention than a US election, but on Wednesday 20th January – Joe Biden will be the 46th president of the United States. Whilst we know who the President will be, the US Senate is not yet decided and there are two run-off elections taking place in January 2021. It looks likely it will be a Republican Senate – therefore a Democratic President and a Republican Senate.

Looking forward we are in extra time between the EU and UK and talks have made significant progress in recent weeks and it will run down to the wire. We expect a trade agreement between the UK and EU – it is in neither party’s interest to not get an agreement done – particularly as economies are still feeling the impact of Covid. This could be supportive for sterling and UK assets – which look cheap relative to other global currencies and stock markets.

Alex Brandreth
Chief Investment Officer

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