Market Comments - Q4 2020

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Second wave of Covid-19, US presidential election and vaccine hope

The autumn and the first winter month were as expected dominated by the coronavirus outbreak as an increase in the number of new infections, especially in Europe, led to new restrictions and lockdowns. This put a damper on risk appetite in the financial markets despite continued accommodative monetary and fiscal policy and rising expectations of a Covid-19 vaccine in 2021. In addition, the US presidential election came closer, and opinion polls indicated that the Democrats headed by Joe Biden would win both the White House and the Congress – a situation which had in advance been interpreted as hostile to equities.

Joe Biden won a comfortable victory at the presidential election whereas the Republican Party seems, at the time of writing, to have regained the majority in the Senate (re-election in the state of Georgia on 5 January 2021). Consequently, a president was elected with whom many people can to a higher degree identify themselves, and in addition a Republican majority in the Senate usually means less state, regulation and tax increases – usually key issues for many Americans. All in all, it is very equity-friendly outcome relative to expectations, which led to renewed risk appetite following a couple of months of consolidation in the financial markets.

One week after the US presidential election, risk appetite gained renewed momentum as Pfizer (US) and BioNtech (Germany) announced that a vaccine against Covid-19 was just around the corner. Later on, similarly positive announcements followed from Modena (US) and AstraZeneca (UK). Hence, the basis had been created for November to become one of the best months for risk assets in recent history as well as a strong end to the somewhat unusual investment year of 2020. Global equities ended the year close to record-high levels, and in terms of return in line with the average return over the past 20 years.


The fund*



Latest quarter

3.67 %

3.10 %

0.57 %


4.47 %

6.87 %

-2.40 %

* See past performance under the tab Past Performance

Right now

Covid-19 vaccine is a game changer for investment opportunities in 2021 when the financial markets will continue to be supported by accommodative monetary policy, and in terms of fiscal policy there are also prospects of supportive measures in the form of infrastructure investment and investment in green transition.

True to tradition, the equity market is a forward asset class and is expected to focus on the positive growth prospects in the wake of a vaccine. Growth performance equals earnings advance, which is also necessary in order to normalise a high valuation level to some degree.

The earnings advance will likewise be supportive of the High Yield corporate bond market and the prospects of a vaccine will reduce the risk of defaults. For the high-rate corporate bond market we anticipate that the ECB will continue its asset purchase programme, which will be a supportive factor despite a low interest-rate level and low credit spreads.

The prospects of rising economic activity may result in upward pressure on the interest-rate level. On the other hand, central banks are determined to keep the interest-rate level low. Likewise, a low inflation level will also offset potential upward pressure on the interest-rate level. The return perspectives of traditional safe mortgage bonds will, however, presumably be very moderate in 2021.

All in all, we will be heading for 2021 with positive expectations of risk assets and hence continued overweight in equities. We point out, however, that market expectations of both a vaccine, earnings advance in the corporate sector and fiscal policy measures are high, so there is no room for wavering. In addition, the global debt level surged in 2020 due to Covid-19 resulting in a higher risk that credit events will in future result in more frequent blows to the financial markets.

Pay attention
Past performance is not a reliable indicator of future results. The value of and return on your investment may fall, and you may not get back the full amount invested. An initial charge is usually made when you purchase and sell units. The fund may invest in instruments denominated in various currencies. At least 75% of the fund assets will at all times be invested in EUR or hedged to EUR. You should be aware that changes in exchange rates may have an adverse effect on your investment. This may also be the case if EUR is not your base currency.

Information in this text should not be regarded as investment advice, and investors should consult their own investment and tax advisers before buying or selling.