Fund Objective

Aims to provide an income in excess of the yield of the FTSE All Share Index with prospects for some capital growth through investment in a spread of authorised unit trusts and/or authorised companies selected from those available in the whole market. The Scheme will not be restricted to any particular economic sectors and the investment policy will take a long term balanced view of stock markets worldwide while maintaining a core holding in the UK.

View on Past Performance

After a strong upward move in the first quarter, the equity market rally slowed in April. The US and UK equity markets posted modest gains, with the S&P 500 and the FTSE All Share rising by 1.2% and 0.9% respectively. European equity markets were less well placed, with the DJ Eurostoxx flat on the month.After hitting new multi-year highs at the beginning of April, the Japanese equity market struggled to make headway on concern over the impact of rising fuel costs and the prospect of higher interest rates. By month end, Japan's Topix Index had dropped by 0.7%. Asian and emerging equity markets outperformed their developed peers during April as political concerns abated and higher commodity prices fuelled gains in the mining and mineral sectors.The fund returned 0.1% during April, which was above the average IMA Cautious Managed fund return of -0.3%. Please remember that past performance is not a guide to future performance. During April the fund benefited from its heavy overweight in UK equities and underweight in bonds, as yields rose steadily during the month. Government bonds were hit hardest - M&G Gilt & Fixed Interest and SG Sterling Bond both ranked in the top fifth of their peer group but still fell by 1.7% & 1.4% respectively.High yield did better, thanks to its equity characteristics, and Henderson Strategic High Yield returned 0.2%. Among our equity holdings, Neptune Income and Invesco Perpetual Income both produced strong performance, with the former returning 1.3% and ranking top in its peer group on the month, benefiting from exposure to large caps and oil and gas stocks.During April we looked at a wide range of potential investments, ranging from secured loans to new investment trust launches. At the beginning of the month the funds of funds became Non-Ucits Retail Schemes (NURS), a regulatory structure that allows us greater flexibility in terms of the types of funds we can invest in; we will be looking to exploit this flexibility on an opportunistic basis over coming months.

Future Expectations

Developments in the global economy could scarcely have been better than they've been this year. Even long term bears, who thought it inevitable that global imbalances would be corrected by a major slow down in the US, acknowledge that higher growth rates outside the US allied to a modest US slowdown may do to the trick. Paradoxically, just as diehard bears turn bullish, we are becoming a little less sanguine.Rapid economic growth is the order of the day, and with few signs of a slowdown in sight, we will continue to endeavour to make money while the sun shines. However, we are cognisant of the risks that come in the wake of such rapid growth. In particular, it usually brings higher real yields and rising inflation expectations. We are into a third year of rapid growth, and bond markets are waking up to the possibility that interest rates are too low.A continued sell-off there may be positive for equities in the short run. In the medium term, it will bring more challenging conditions.

Fund Details