The dominant narrative in markets in recent months continued in August. The view that current inflationary pressures are temporary sets the scene for a becalmed bond market.

In equity land, this translated to continued outperformance by “quality growth” stocks versus the “value” cohort. While this presents a headwind to our selection of cyclical and/or value names, it is within the consumer discretionary sector that we’ve experienced a notable drag. This can be explained by the market’s reaction to the latest variant of COVID-19, as well as much publicised supply side constraints.

Our sense is that expenditure forgone now by many industrial and/or consumer businesses is simply deferred not lost. Therefore, we have chosen to stick with our selections and our strategy.