April Market Commentary
Commentary by Levendi Investment Management Limited – A Thornbridge Appointed Representative
Last month’s challenges have certainly carried on to April, with UK markets holding relatively steady at 0.38% but European markets dipping -2.55% for the month. The Eurozone saw a two speed economy in April with manufacturing coming to a crawl due to supply constraints and risk aversion caused by the Russian invasion, while the travel and recreation sectors saw a marked surge in spending. Germany’s economy – the Eurozone’s powerhouse, potentially contracting by 2.2% in 2023 according to researchers in the event of an energy shock weighed heavily on investor sentiment the most. That figure highlights the realpolitik Western leaders are confronting trying to discipline one of the world’s biggest petroeconomies.
UK markets fared relatively well for the month buoyed by a flush oil sector as a result of supply shocks and unwavering demand. BP for example is touting billions in extra buybacks. Demand is not showing any signs of serious slowing down either despite China’s underestimated ‘zero Covid policy’ and the resulting snap lockdowns. This strict approach is disrupting fragile trade lines and is likely to be spelling continuing trouble for the Asian region.
Against this backdrop, the Levendi Thornbridge Defined Return Fund dropped -1.05% in April. As expected, investor confidence will be slow to return but the Fund, owing to its composition, can afford to wait as long as needed while markets trend sideways. Some 40% of the portfolio has maturities as far as 2032, providing tremendous optionality. During the month despite market conditions, one product Autocalled, allowing us to reinvest into a new product. Sensitivities are still in line with a 47.8% average buffer to capital and 39% average buffer to target returns.