31 December 2021
The Fund ended the month 1.21% higher, marginally underperforming the sector average return of 1.35%.
Equity markets were generally stronger during the period, although weakness was seen in markets influenced strongly by the fortunes of China, such as the Hang Seng. Markets were stronger as hopes grew that the lat est Covid variant, Omicron, would not lead to as severe restrictions being put in place as initially thought.
The fixed income asset class was weaker as a whole during the month. Bond yields rose on the back of stronger than expected inflation data. This prompted the Bank of England to raise the base rate from 0.1% to 0.25%. The US Federal Reserve were also more hawkish. Whilst they did not raise rates they did quicken the pace of tapering. The latest forecast of interest rate expectations by committee members, also known as the dot plot, also suggested that we could see three, possibly four rate rises in 2022.
Liontrust Special Situations was our strongest performing fund in the month. UK equity funds allocated to in the Fund were some of the strongest performers overall. Those funds with a value investment style also performed well on the back of rising bond yields.
During the month the position in Allianz Fixed Income Macro was sold out of completely. Its positioning regarding inflation has been detrimental to performance. Whilst risks remain that higher inflation could still prove stubborn than expected, which could lead to further weakness in returns, the decision was taken to remove this fund. Proceeds from the sale were held in cash.
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.