Executive Summary
Reflation-based trade remains dominant as fiscal policy support persists, central banks stay dovish, and vaccination campaigns support a rebound in pent-up demand and investment activity. The greatest potential risks in today’s market remain a sharp rise in interest rates and a bursting of the US tech bubble. That said, the two main triggers — earnings collapse and monetary tightening — that could lead to a serious bear market in equities remain missing. Overall, we see higher levels of uncertainty now than back in 4Q 2020, as well as tighter credit spreads/stretched valuations. We view the current situation as a more asymmetric risk set up. The Technology of the Future Fund had a +2.05% return in January, outperforming the benchmark MSCI World Index (USD), which had a return of -1.05%.