Monthly Update
31 January 2023

The Fund posted a return of 4.48% for January, outperforming the sector average return of 3.35%.

The performance of key equity market indices was strong during the month. The Hang Seng proved a strong performer in local currency terms, with the Chinese authorities continuing their push to have the economy fully reopened. Another strong performer was Europe. The winter being thus far warmer than normal helped abate concerns over energy supplies, generating hope that the UK economy may not be as weak as first envisaged. Over the month, UK mid-cap stocks outperformed their large counterparts. Whilst the economy is still expected to enter recession, fears over its severity were tempered.

UK fixed income indices posted positive returns during the month. Despite western developed markets maintaining a resolute and relatively hawkish stance, investors took comfort from softer inflation data. Whilst the latest Federal Reserve dot-plot suggests no interest rate cuts during 2023, the market is pricing that we could potentially see two cuts. This helped push bond yields down. Whilst inflation remains more elevated in the UK, it does appear to be showing signs of softening.

During the month a change was made within the emerging market equity allocation. The Baillie Gifford Emerging Markets Growth fund was sold down to zero exposure, with proceeds reinvested in the Redwheel Next Generation Emerging Markets Equity fund. The latter looks to provide exposure to growth opportunities in the emerging and frontier market universe that are under-represented by current indices. The manager and the team believe that this opportunity set will undergo political and macroeconomic structural changes in terms of employment, urbanisation and infrastructure development, in the same way that larger countries, such as China and India, have already.

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.

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