Fund Objective

To achieve over a longer-term horizon higher returns than those available from money market instruments denominated in Sterling

View on Past Performance

The fund produced a positive return over the quarter, while the MSCI World Index hedged to GBP fell. Our favoured regions remained the US and Europe ex UK, while we remained more cautious in Japan, where we reduced our equity allocation. One of the key themes for the period was a greater allocation to fixed income, in particular in the US, where we favoured curve steepeners, and in the UK, where our constructive view on Gilts added alpha.With correlations between bonds and equities remaining negative, government issued debt provided some protection against sharp drops in equity markets helping to dampen the volatility of the fund. We were also able to benefit from volatility by implementing option trades.Towards the end of the quarter, we reduced our overall equity exposure and took long positions in the euro, which has remained strong against sterling, the latter currency weakening against a backdrop of lower UK rate expectations.

Future Expectations

While we remain cautious in equities, we do not anticipate a full recession in the US. The outlook looks less certain than for many years, but there are signs that the US consumer will remain resilient and the Federal Reserve will continue to ease policy against a backdrop of slowing growth. The main beneficiaries of such a scenario will continue to be Asian markets. We remain long duration in the bond part of the portfolio, anticipating that central banks will provide support for bonds.

Fund Details