30 June 2022
UK fixed income struggled as an asset class through June, but there was some respite towards the end of the month for some. Non-investment grade, high yield corporate bonds were the weakest performers during the period. As fears of economic slowdown and recession continued to build the default risk rose also, although to date we have not seen any material signs of a pick-up. Still, yields rose and the spread against government bonds widened accordingly. Whilst still in negative territory for the month, concerns over a recession meant that UK gilts partially recovered earlier in the month losses. This was also true for investment grade corporate bonds, although not to the same extent.
Equity markets were also weaker during the period. In the UK small and mid-cap stocks underperformed their large cap counterparts, driven by the recession concerns referred to above. US and European equities were also weak performers. Both regions saw their valuations compress. Analyst earnings expectations however are yet to adjust, making some market commentators and asset allocators concerned that there could yet be a further downward leg in equity prices. The exception to the rule were Chinese stocks, with the Hang Seng, for example, ending the month in positive territory. These had already suffered a sharp fall from previous highs and continued to respond positively to the economy reopening and the rhetoric around regulation subsiding.
The Fund posted a return of -3.87% for June, outperforming the IA Flexible Investment sector average return of -4.17%.
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.