Exposure rates of the Dorval Asset Management Range – 26th November 2021

With the fifth Covid-19 wave tearing across Europe, news of the latest variant of concern B.1.1.529 has wreaked havoc on the financial markets. At this point, we will need to wait for more detailed analysis from scientists to ascertain whether this new variant will have a similar effect to the Delta mutation, which now dominates, or if it will be more on a par with other lesser variants that have remained in the minority (Eta, Iota, etc.) or locally contained, such as Gamma in Brazil. The burning question now is just how effective vaccines will be on this new mutation: details are expected over the coming two weeks, according to executives at Pfizer/BioNTech.

As we wait for more information on the B.1.1.529 variant, here is a brief overview of what we have gleaned about the virus as well as the reaction of economies worldwide after the experience of these past months.

1/ Vaccines are effective in breaking the link between infection and hospitalization/death (cf. chart 1): stringent lockdowns are actually a result of healthcare systems reaching saturation point.

2/ Vaccines become less effective over time, with their effects on virus transmission particularly dwindling (cf. chart 2), which explains why a third booster dose is needed to swiftly bring down the number of new cases, as shown by the example of Israel (cf. chart 3).

3/ The economic effects of each successive wave of the pandemic decrease as a result of better management of restrictions, changes in behavior – with actions such as masks, handwashing and social distancing – and adaptation of the economic infrastructure.


The case worst scenario would be the failure of current vaccines to combat the new variant, in which case another vaccine would need to be developed – with around six weeks required for mRNA type vaccines – and subsequently rolled out across the population worldwide, which would require several months. This is a particularly high risk as the new variant carries triple the number of mutations compared to the Delta variant (cf. chart below).



Authorities’ immediate reaction was to cancel international flights and ramp up Covid border controls. International tourism has been the main victim of the series of Covid-19 waves. We had already wound down the Post-Covid theme in our international funds several weeks ago as we had hit our rerating targets.

Renewed anxiety on the pandemic has substantiated the central banks’ cautious approach to normalizing monetary policy. At this stage, it seems unwise to expect an acceleration in monetary policy tightening for such times as doubts remain on the pandemic situation at least.

We have therefore unwound our short positions on US Treasuries in our international portfolios and cut back our risk exposure in our most defensive profiles by way of precaution.


Download the weekly letter in PDF version: Exposure rates of the Dorval Asset Management Range – 26th November 2021

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