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Input from Jupiter’s Fund Manager Amanda Sillars received yesterday (15/04/2020) below as she outlines the four prominent themes in the market today:

Amanda Sillars

Fund Manager, Independent Funds

Quality and technology reign supreme in markets

Four prominent themes have emerged over the last few weeks, said Amanda Sillars, Fund Manager, Independent Funds: reduced dividends, exceptional innovation, and the supremacy of quality and technology stocks.

The first two themes are new. Firstly, it has been reported that over 40% of UK companies so far have ditched their dividends. On a more positive note, the second new theme is the exceptional innovation that is being unleashed in response to the crisis, particularly within the pharmaceutical, medical, monitoring and testing sectors.

The two other themes existed before the coronavirus, but have been supercharged as a result. The supremacy of quality has now gained even more momentum as fund managers unpick the balance sheets of companies they own and stress test for low or no earnings for Q1 and Q2. Many managers have sold weak companies and added to existing quality holdings: companies that are leaders in their fields, with strong balance sheets and long-term, responsible management. Owning quality stocks is seen as essential for survival: the strong companies are getting stronger, seizing new opportunities and investing while their competitors are struggling.

The final supercharged theme is technology, which has been described as the new defensive sector. The shift from physical to digital has accelerated at supersonic speed and is one of the primary outcomes of the global lockdown.

While a return to pre-coronavirus economic activity may well be several years, not several quarters, away Amanda believes that truly active, forensic fund managers can capture the huge opportunities emerging through these extraordinary changes and can identify the best companies, to the benefit of their clients.

For the right Fund Managers, they can see opportunity and select the right kind of stocks not just to survive but that will thrive in the current market.

Carl Mitchell

16/04/2020