April was a difficult month for investors like the 1stquarter of the year. Several factors weighted on markets: the war in Ukraine, new lockdowns in China and an expected hawkish monetary policy driven by worrisome inflation. As such, rising yields through both credit bonds and Treasuries, together with substantial losses across growth stocks continued.
Conversely, these high quality businesses we do like to hold across our portfolios are clearly performing as expected on the fundamental side, so that drawdowns are a strong derating factor.
Companies that can maintain margins, growth and returns on capital helped by a strong pricing power should be a relative outperformers whether the tighten monetary policy we are seeing tips the economy into recession. We clearly look at these market corrections as an entry point that brings excellent annualized returns over the coming years.
