Investor's digest

July market update – Gold still shines brightly…

13 August 2020

July was another month where the impact of trillions of dollars of stimulus money continued to dictate market direction, with some noteworthy moves in both asset markets and policymaking. The most significant of which was in Europe, after the EU agreed a €750bn rescue package for member states. This event was described as ‘game changing’ by leading commentators because it used the creditworthiness of stronger members to raise money for weaker ones for the first time. In effect, this decision marks the point at which the EU embarked on a single ‘tax and spend’ process to complement the single currency, something which could go a long way towards de-risking investments in the entire region.

“The pound and euro rose around 5% against the dollar, which is a very large move for the foreign exchange markets”

This stimulus package added to the unprecedented amount of money already flowing through the financial system and had the effect of driving prices on government bonds to all-time highs (or yields to all-time lows, if we used the more technical market vocabulary). With US market interest rates no longer so different from the rest of the world, support for the dollar ebbed away sharply in July, a readjustment that many had been expecting for a long time. The pound and euro rose around 5% against the dollar, which is a very large move for the foreign exchange markets and a reminder of just how abruptly asset prices can shift in the current investment climate.

“Gold certainly shone in July”

Gold had another strong month, benefitting from the spill-over implications of the moves described above and powering to new highs on sustained global buying. In a world where valuations of traditional ‘safe’ investments are so stretched alternative sources of protection for portfolios are in demand and gold certainly shone in July.

“Equity markets on the other hand had a far more uncertain month”

Equity markets on the other hand had a far more uncertain month, as they fretted over the implications of multiple Covid virus flare ups. A steady escalation in tension between the USA and China also contributed to the generally weak tone, despite the supportive news from the corporate earnings season, which ended up being better than expected.

It is clear now that stimulus at an unprecedented level has helped markets recover, lifted corporate sentiment off the bottom and to some extent, fuelled a recovery in the real economy. For markets to progress from here requires something of a leap of faith. It is unclear whether the damage caused by the shutdowns is deeper and longer lasting than what is evident now. Similarly, whilst political events acted to boost sentiment in July, the upcoming US Presidential election and Brexit negotiations retain the ability to unsettle investors as we move into the final quarter of the year.

“For markets to progress from here requires something of a leap of faith.”

Overall portfolios have tended to be on the right side of events since the lows of March and we have been busy in assessing new investments and ensuring portfolios reflect our best ideas continuously. Our general sense is to keep a ‘glass half full’ mentality, with a tilt towards those assets that sit somewhere between traditional risky or safe investments. That includes corporate and convertible bonds and mixed asset or unconstrained manager styles.

Our reasoning is that although we still think the amount of stimulus in the system will overcome the obvious economic issues, we are not so convinced in this view that we feel we need to chase risky assets from here. On the other hand, we are not so worried about the outlook that we feel we need to rush to buy overpriced defensive assets. Something in the middle is probably the best option for now, until we know more about what our new normal will actually look like.

“Overall portfolios have tended to be on the right side of events since the lows of March”

Portfolio performance

Portfolios delivered between +1% to +3% during July, depending on the specific risk mandate, with the higher risk portfolios moving the most. Strongest performances came from gold and gold-mining exposed managers, with other notable performers being non-UK equities. Convertible and corporate bond managers also performed well, whilst the main detractors were the UK equity positions. Within these positions it was the income focussed managers that were weakest as uncertainty over the extent of ongoing dividend cuts persisted.


On behalf of the Saltus Investment Committee, August 2020

Saltus Asset Management is a trading name of Saltus Partners LLP which is authorised and regulated by the financial conduct authority. Information is correct to the best of our understanding as at the date of publication. Nothing within this content is intended as, or can be relied upon, as financial advice. Capital is at risk. You may get back less than you invested.

Arrange a financial review...

Share this article:

Discover more

Investment management

We are unconstrained, multi-asset class investors with an award winning track record. The asset management team serves both institutions and individuals. This focus and experience means our UK private clients have access to superior investment solutions that are typically unavailable to retail clients.

Investment process

Our team of experts will partner with you to tailor a suitable investment mandate with an appropriate risk budget. Our Asset Allocation Committee shapes the core components of our investment portfolios before assigning capital to various asset classes through an allocation to third party managers.

Track record

We have a long track record of producing superior risk-adjusted returns for our clients. This is in part due to our ability to consistently identify third-party investment managers who outperform their benchmarks. We do this through a proprietary ‘Five Factor’ model designed to identify investment manager capability.

Environmental, Social and Governance

We believe in responsible investment management, and so assess Environmental, Social and Governance (ESG) factors are assessed prior to making any investment decision. We then continue to work closely with third party managers on an ongoing basis to improve their ESG performance.


Our expert investment management team has an established history of working in partnership with professional intermediaries. We help provide the support your clients may need and understand the requirements of each separate case prior to designing a suitable investment strategy.

Related blog posts

Get in touch with Saltus…