Financial markets in the UK had a tough time of it in May. Equities, bonds and commercial property all lost ground over the month, as concerns over rising inflation and faltering economic growth dominated investors' mood. The Fund beat its benchmark over the month, although the loss made in May put it behind its sector average.The Fund's small exposure to commercial property proved costly in May, as this sector was hit particularly hard by the diminishing chances of an interest rate cut in the near future. The Fund 's natural bias towards equity income funds - which are needed to generate the income paid out by the Fund - also held back returns.These types of funds tend to have a relatively large exposure to high -yielding financial companies and low exposure to low -yielding oil companies. With the oil price rising and concerns over the banks persisting, this dragged on the Fund's overall return for the month.Our new holding in Close Japan Accelerated was our top performer for the month, rebounding strongly from what we considered to be a cheap price when we bought it at the start of the month. We added this holding to the portfolio having taken profits from the excellent run of returns generated by SG Japan Core Alpha. Summit Germany, in contrast, performed poorly, reflecting the wider issues affecting real estate funds across Europe.
