31 March 2020
The Fund fell 12.29% during the month, underperforming the IA Flexible Investment sector, which fell 10.95%.
This was a month which was do minated by the spread of the Coronavirus, the lockdowns which then followed and the impact this would have on the global economy. Equity markets fell at a record pace as investors fled to the safety of cash on concern that not only would companies earnings collapse but some may struggle to remain solvent. Fixed income markets were not spared either, with significant flows seen out of investment grade and high yeild bonds as investors feared downgrades and a potential rise in defaults.
We have however seen central banks around the world come to the table quickly with unprecedented levels of stimulus, including unlimited QE from the US Federal Reserve, loans and guarantees and for the first time the ability for the US Federal Reserve to intervene in the investment grade corporate bond market. We have also seen the gloves come off in terms of fiscal stimulus by governments, including loans and grants along with schemes to help keep employees. This led to a relief rally in the latter stages of the month.
The Fund remains defensively positioned, with an underweight position in equities whilst being overweight in fixed income, alternatives and cash relative to the neutral allocation. We continued to reduce our equity position in favour of absolute return funds and cash. We also rotated some risk away from equities and into fixed income in recognition that credit spreads had widened markedly, the US Federal Reserve having provided a backstop in this market. We did add some risk via a structured note, taking advantage of the significant rise in volatility to capture what potentially could be a strong return profile.
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.