31 July 2022
After a difficult year to date, UK fixed income enjoyed a stronger July in terms of performance. High inflation remains a concern from central banks globally, including the Bank of England. There was a much anticipated 0.5% hike in the base rate for the beginning of August and this was duly delivered, the base rate now standing at 1.75%. They now also forecast that inflation could reach a high of 13.3% later this year, up from the current level of 9.4%. The more dominant concern over the month however was the detrimental impact that the higher cost of living, coupled with tighter monetary policy, was having on the economic outlook. The IMF have recently downgraded their forecast and the Bank of England predict that that economy will be in recession from the fourth quarter this year through to the fourth quarter of 2023. Concerns sent yields lower.
Most equity markets also ended the month on positive territory. The US led the way, with the S&P 500 driven higher by a strong performance of tech stocks, which had previously been sold off aggressively. The latter were supported by falling bond yields, along with second quarter earnings reports which surprised to the upside. There was also a stronger performance from other indices which had suffered more in the year to date, including the FTSE 250 and Euro Stoxx 50.
The Fund posted a return of 1.10% for July, underperforming the sector average return of 3.22%.
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.