The craft of investing

Concerns about the solvency of US regional banks have had an impact on investor sentiment recently, though no one believes it to be symptomatic of a larger, sector-wide issue, and much less in Europe.

Early in the month, persistent inflation rates led investors to anticipate higher intervention rates from the central banks, which translated into rapid rises in sovereign interest rates.

Overall, 2022 closed with better-than-anticipated results, confirming the capacity of the companies in which we invest to navigate an environment of inflationary pressure and restrictive monetary policy.

Current bond returns warrant the inclusion of this asset class, largely abandoned in previous years.

As stock markets rebound from October 2022 lows, the multiples of top companies become more demanding and, in some cases, excessive.

Equity markets began the year with considerable appreciations. Slightly better-than-expected and progressively improving inflation data reduced the likelihood that the central banks would apply more restrictive monetary policies.

The latest IMF forecasts confirm a global slowdown, but not a recession, reiterating the difficulty of anticipating the macroeconomic scenario.

We remain confident that the key driver of share prices over the long term is profit growth.

2022 has tested our clients’ patience and renewed their confidence, which we sincerely appreciate. We strive tirelessly not to disappoint and we remain confident, as ever, that “the world will not end”.

This strict investment criteria explains the low turnover of our portfolio.

Hope that the pace of interest rate hikes will ease soon has reinvigorated public debt and equity markets.

We have capitalised on the excessive compression of multiples among top-quality companies to add names at valuations far below their historical average.