Investment Committee Report February 2021

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Investment Committee Team

Our investment committee is made up of investment experts from 75Point3 and Dragon Investment Managers. Each member of our committee takes a proactive role in monitoring our investment proposition. They are committed to providing an ongoing formal review process and providing invaluable research and data to ensure our clients receive the best possible service.

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David Jones

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Tracy Brookes

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Antonia Martins

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Mark Bonsall

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David Porter

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Chris Marshall

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Thomas Durkin

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Gareth Goodson

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Kirsty Haydock

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Martyn Wickens

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Market Summary and Investment Committee Review

February was a mixed month for assets, with commodities and cyclical equities outperforming, and fixed income sectors seeing some pressure from sellers.

The main reasons for drawdowns across the fixed income space was simply the reflation trade, backed by accommodative government stimulus and vaccine rollouts around the world.

Inflation prospects also increased through the month, with a number of economies looking to lift lock-down restrictions and pent-up demand from consumers set to be unleashed. Inflationary pressures from rising oil costs and other industrial commodities could also have an impact.

Sovereign bonds, exhibiting some of the lowest yields in history were among the hardest-hit areas: UK markets leading the sell-off pulling back around c-5.8% over the month.

Overall news has been supportive of a near-term risk-on trade, but increased volatility, inflation concerns and rotation between assets has held back performance.

Looking at the portfolios, we can see all these factors play-out, with portfolios that held higher equity allocations outperforming. Additionally, and certainly, at the lower-risk end of the spectrum, the smoothed-funds run by LV provided investors with some respite from the volatile environment.

As we come into March and April, decent economic data from Europe, US, and Asia will be important for investors to confirm the expected growth trajectory for 2021 that’s being priced in.

February 2021 Performance

Three year performance to February 2021

Jargon Buster

Cyclical equities

A cyclical equity is one whose underlying business generally follows the economic cycle of expansion and recession. Cyclical businesses perform well during economic expansions but typically see sales and profits fall significantly during recessions and other challenging economic times

Reflation trades

When bonds are sold in anticipation of new issues on the horizon, this is called a reflation trade. Reflation trades also are popular in the equity market.

Smoothed funds

Smoothed funds are designed to provide long- term growth with a degree of investment risk but offering a smoother return profile than is generally available from other multi-asset funds.


Inflation is the decline of purchasing power of a given currency over time. A quantitative estimate of the rate at which the decline in purchasing power occurs can be reflected in the increase of an average price level of a basket of selected goods and services in an economy over some period of time.

Accommodative Government Stimulus

Governments around the world can use policy measures to help support the economy, the main these policy tools include the control of taxation and government spending. Lowering taxes and increasing spending is generally considered to boost economic output, the opposite of this would see taxes rise and spending cut, leading to conditions that supress activity. An accommodative, or loose stance is when policy is focused on boosting output, and contractionary or tight policy when their aim is to bring down activity. At this time, many governments are accommodative, implementing large spending programs to support workers and businesses get through the COVID-19 pandemic.

Near-term risk-on trade

A market or economic outlook can be separated by the time-horizon it covers. Generally near-term outlooks can apply to a time horizon spanning from several days to a number of weeks. A risk- on or risk-off trade environment are ways of thinking of the sentiment, or mood of market participants: with risk-on periods describing an environment where investors feel a little more certain of outcomes and happy to take positions that display greater reward potential and more vulnerability to a market downturn.


A drawdown refers to how much an investment or trading account is down from the peak before it recovers back to the peak. Drawdowns are typically quoted as a percentage, but dollar terms may also be used if applicable for a specific trader. Drawdowns are a measure of downside volatility.

Sovereign bonds

Sovereign bonds are debt securities issued by a government to raise capital for spending needs, such as on government programs and paying down old debt.

Equity allocations

Allocated Equity means the amount of Equity, if any, allocated to a Series of Bonds or to a Loan or to an issue of Local Governmental Obligations as specified in an Equity Allocation Certificate; Sample 2


A commodity is defined as a tangible good that can be bought and sold or exchanged for products of similar value. A commodity is a basic good used in commerce that is interchangeable with other goods of the same type. Traditional examples of commodities include grains, gold, beef, oil, and natural gas. For investors, commodities can be an important way to diversify their portfolio beyond traditional securities.


Volatility is a statistical measure of the dispersion of returns for a given security or market index. In most cases, the higher the volatility, the riskier the security