31 January 2022
The Fund posted a return of -3.60% for January, outperforming the sector average return of -4.75%.
Equity markets struggled in January, with many posting negative returns. The potential that inflation was becoming more engrained and interest rates would need to rise, raised concern that central banks would start to remove the punchbowl of liquidity. This also created a rotation within investment styles. The potential for higher interest rates favoured value stocks, with growth stocks selling off more aggressively.
January was a difficult month for fixed income as central bank rhetoric turned more hawkish. Within UK markets, gilts were the weakest performers given their interest rate sensitivity, closely followed by investment grade bonds. Although there was no movement in the UK base rate in January, a hike was priced in for February and the Bank of England duly delivered. Inflation continues to rise and is likely to move higher still before peaking.
There was little activity on the Fund during the month. There was the maturity of a structured note. This was a maximum 8-year investment, requiring the FTSE 100 to be at or above its initial strike level of one of its annual observation dates to mature early. This was achieved on the second anniversary, returning 22.6%. This compares to the total return for the FTSE 100 for the period of 8.19% and 7.87% for the IA UK All Companies sector average. Indeed, ranking against funds within this sector, the investment would have ranked in the top decile.
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.