While we were all hanging up our stockings on Christmas Eve, Boris Johnson and Ursula von der Leyen announced that the Brexit deal that we have all been agonising over for so long had finally been agreed. I have to say that von der Leyen gave us all a lesson in graceful statesmanship, quoting British greats, from the Beatles to Shakespeare and TS Elliott (American-born), in expressing her sadness that Britain was leaving the EU. Our own Prime Minister’s speech writer was presumably off for the holidays at this stage, as the best Boris could muster was his clumsy gaffe, "that’s the good news from Brussels, now for the sprouts.”

Speeches aside, UK markets responded well to the news, with the FTSE All Share rising +3.7% in December and the more domestically-focused FTSE Small Cap and AIM indexes up +6.2% and +10.1% respectively. Drilling-down into this performance, it was notable that the more cyclical sectors such as Mining, Leisure and Financial Services were the top performers. The only two sectors in negative territory for the month were Consumer Staples and Pharmaceuticals, both sectors that traditionally are seen as more ‘defensive’ and that tend to get left behind when the wider market is roaring ahead. There are now some attractive opportunities in the Consumer and Pharma sectors, with long-term winners such as Unilever and AstraZeneca having been overlooked in recent months (from a market perspective), but this is for our portfolio activity commentary later in the month…

Before ringing the victory bell for UK markets, I need to remind myself that the FTSE 100 was the worst performing major global stock market in 2020, down -14.3% vs the S&P 500 +16.3%, FTSE Europe (ex UK) +7.3% and Nikkei +16.0%. London markets lagged so badly in large part due to Brexit fears, an over-reliance on the Banking and Oil & Gas sectors and perceived poor handling of the COVID-19 pandemic.

The fact that we have just started our third national lockdown proves that we are not out of the woods yet, but I am going to dare to say that it is different this time… We do now have two vaccines approved and being rolled-out nationwide and, while not perfect, we have so much more clarity on Brexit than we have had at any point since 2016. The American people are even on the cusp of crowbarring Donald Trump out of the White House (please)!

I am optimistic and hopeful that 2021 will be a significantly better year for UK markets. Reflecting this view, our UK Equity Growth Fund is close to fully invested and has enjoyed a positive start to the year.

I would like to wish you all a Happy New Year and a safe few months ahead.