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A vaccine is no silver bullet; keep the long-term view

Ketan Patel, co-manager of the Amity UK Fund gives us his thoughts on the recent news of vaccine breakthroughs:

The recent positive progress that has been shown by a number of vaccine trials is much welcome, in what has been a difficult year for fund managers. However, it needs to be tempered with a view that this isn’t a silver bullet to kill the pandemic. We have a long way to go before we can claim any form of victory against the virus. There are still safety and efficacy concerns to be addressed, and hopefully more positive clinical data will emerge in the coming months. The biggest concern for us is on storage and distribution on the Pfizer/BioNTech vaccine, which requires very cold temperatures across the whole supply chain. In addition, the manufacturing capability will need to be ramped up significantly to meet global demand. However, it should be noted that there are other vaccines in late development as well and this augurs well for 2021 and beyond.

As a result, in recent days a number of sectors that suffered initially during the lockdown – banks, travel and leisure & hospitality – have bounced back markedly, albeit from significant lows. Further out, the demand for energy will rise as pent up demand is potentially released with greater consumer activity as lockdown measure ease next month and into 2021. We remain positive on diagnostic, medical technology and pharmaceutical companies which are well positioned to take advantage of any further positive news on the vaccine. In addition, a positive outcome on Brexit could lead to the UK being less of an investment pariah to asset allocators, which will be very welcome after a tough 5 years since the decision to leave the EU in 2016.

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