In particular, energy, retail and transportation prices have risen since the vaccine was first announced on November 6, while gold, IT and utilities have all declined. Surprisingly top-performing companies tumbled this year, and firms with low growth, low earnings revisions, or suddenly high debt outperformed.
During 2020, investors de-rated the companies most affected by the epidemic, including travel, energy, real estate and finance companies. In return, the investors re-evaluated positively the few companies that are expected to do better in the pandemic world, “wrote Mr. Aptide.
“Over the course of 2020, the gap between the Covid-19 winners and the losers in Covid-19 has become stark. The recent price reaction to positive vaccine news partly reflects the high prices the pandemic is causing.”
The top 20 per cent of stocks that outperformed between November 6-17 rose 22.6 per cent, but is still down by 12.5 per cent so far.
Mr Aptide said that “vaccine winners” remain more vulnerable and have lower quality, and he has kept less volatile companies in his Australian equity fund portfolio. He added that his fund underperformed the benchmark ASX300 in October, which was up 1.9 percent because his fund did not own the big four banks.
Given this, I expect Mr. Apted’s fund to also be underperforming in November as the ASX 200 is currently up 12.9 percent for the month with the Big Four banks among the six largest shareholders. The financial sector is up 19.3 per cent so far this month.
