C8 GBI Good Governance January 2022 Monthly Report – Cirdan Capital

The ‘Good Governance’ certificate performed badly in January, particularly in the last week of the month, giving back December’s outsize gains, to end 6.6% lower on the month. There was no overriding theme, with the broad sector sell-off in US stocks, on rising expectations of US rate rises, also reflected in the ‘Good Governance’ portfolio.

One positive attribute of the ‘Good Governance’ investment approach is that it tends to outperform in market dislocations (e.g. 2020 Covid sell-off) on a flight to quality but, in this case, our Good Governance portfolio underperformed the equity sell-off. Looking back over the full performance history since 2007, both in and out of sample, there is only one equivalent episode, in Dec 2010 – Jan 2011, when there was a drop of 12.2%. We note, in this period, that these losses proved only temporary and were fully recovered within 4 months. Indeed, in the current drawdown, the certificate has already recovered 1½% in the first few days of February.

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