30 April 2020
The Fund posted a return of 7.19%# in April, in line with the IA Flexible Investment sector average return of 7.25%. (Source: FE Analytics)
Equity markets around the world were in positive territory for the month, rebounding from what was a turbulent March. Equity markets were strong despite worsening economic data, a significant level of dividends being cancelled or cut and companies removing guidance for next quarter earnings. Instead investors were focused on central banks, in particular the US Feder al Reserve, who announced an unlimited QE program and further help for corporates. Although indices remain below their February peaks, they are perhaps more challenging from a valuation standpoint.
The latter also provided support for the investment grade and high yield bond market. For the first time the Federal Reserve committed to purchasing bonds within these markets. Not only did this lead to record issuance by companies but it has also led to investors trying to ‘front run’ the central bank in anticipation of them buying.
The Fund remains underweight equities, overweight in fixed income, alternatives and cash relative to the neutral allocation. Exposure to emerging market equities was reduced. Although from a valuation perspective this market looks cheap, we remain concerned about the shortage of US dollars and the impact that this can have on this asset class.
A new exposure to silver was established during the month via an ETF. Whilst there is some reliance on its industrial use, as a precious metal it has lagged gold significantly, with the gold to silver ratio reaching highs not seen since 1990. We therefore think there is an opportunity for catch up here. Along the same theme we also established a new position in a fund specializing in gold and silver miners along with precious metals. Again, the valuation of the former is lagging that of the underlying asset and we believe there could be an element of catch up here also.
#C share class, total return, bid-bid.
This article is for information purposes only and should not be construed as advice. We strongly suggest you seek independent financial advice prior to taking any course of action.
The value of this investment can fall as well as rise and investors may get back less than they originally invested. Past performance is not necessarily a guide to future performance.
The Fund is suitable for investors who are seeking to achieve long term capital growth.
The tax treatment of investments depends on the individual circumstances of each client and may be subject to change in the future. The above is in relation to a UK domiciled investor only and would be different for those domiciled outside the UK. We strongly suggest you seek independent tax advice prior to taking any course of action.
Past performance is not a guide to future performance.