Fundcalibre’s Darius McDermott is expecting a volatile Santa rally in 2021 and plans to let off steam with plenty of limoncello at the office Christmas party.
What have been your top and worst-performing fund picks during the year?
Marlborough European Multi Cap (which was renamed IFSL Marlborough European Special Situations last Friday) has been the best performer in the VT Chelsea Managed funds – it’s up over 40% this year. Its focus is on mid and small caps (like the UK version investors may be more familiar with) and stock picking has been exceptional this year.
Allianz Strategic Bond has been the worst performer. The manager runs it to have very low correlation to both equities and bonds and we use it for this purpose within the funds. Last year it had a stellar year, going up in March 2020 when everything else went down and returning some 30% over 12 months. This year it has given up some of those gains but remains well ahead of benchmark and its peer group over three and five years.
How do you expect the Santa rally to play out this year?
I think it’s going to be a volatile month. At the time of writing, a new variant has only just been discovered and, until we know more, it’s impossible to say what will happen. Last Friday, markets fell 3% or more. In contrast, companies like Zoom, Peleton, Moderna – all the stocks that did well in lockdown – were up over 10% at opening. So newsflow will dictate the movements and direction of markets this month and if it’s very bad news I wouldn’t be surprised to see another fall like we had in February/March 2020. If it’s not as bad as people think, we could have a last-minute rally late in December.
What are your biggest over and underweights heading into 2022?
We’d like to go overweight the UK, but we’ve not quite got the courage of our convictions! In our funds that hold bonds we are underweight fixed income, as we prefer specialist areas where yields are higher. Within equities we remain overweight India, which has done very well and we have taken some profits. Alquity Indian Subcontinent has done especially well in the VT Chelsea Managed Funds.
How much have you been meeting fund managers face-to-face this year compared to last?
We saw no one face-to-face last year, so yes, relatively speaking we are seeing a lot more! But face-to-face meetings are certainly nowhere near the level they used to be. We see some managers in our offices and some in the City, but about half of meetings are still on Zoom. We are keen to see more face-to-face.
How have in-person meetings changed compared to pre-pandemic times?
We’re possibly more pleased to see people than we were! But the meetings themselves haven’t really changed. We’ve changed though. In the past we would have seen people in the City and then, if we liked the fund ,asked them to come to our offices for a second meeting. Now we see managers initially on Zoom and then face-to-face. There tends to be more of our research team on the initial call too, so there is more debate at an earlier stage.
Are you going to have an office Christmas party this year? If so, what is the plan?
Yes. A long lunch and limoncello (see above)! And plenty of it!
How different are your Christmas plans going to be in 2021 compared to last year?
I’m still hoping to go away on holiday for part of the festivities, but we’ll wait and see if that happens. Whatever the outcome we are certainly likely to see more family and friends this year as we couldn’t last year.
What’s on your Christmas wish list?
For Covid to go away and Chelsea to win the Premier League again ; – ) Possibly in that order….
