Fund manager commentary
Following the quite sharp pull back which was experienced by most global equity markets in January the reverse was experienced during February. UK and European equity markets recovered and more than made up the declines of the previous month whilst the US Asia/ Pacific and Emerging Markets recovered but not enough to make up for January’s falls. The Nikkei in Tokyo declined for a second consecutive month. The poor performance of the US, Asia and Emerging Markets can be partly explained by the rather surprising strength of sterling relative to the dollar, which rose 2% in February, and therefore reduced the returns of these markets when translated back into sterling. It is not easy to pinpoint exactly why sterling has risen strongly against the dollar since Q3 2013 however further upgrades to UK economic growth will played a part. Against this background the FTSE All Share Index rose by 5.2% whilst that of the FTSE Equity Investment Instruments Index gained 3.7% (both figures are total return). The Net Asset Value of the Income Portfolio was ahead by 3.9% whilst that of the Growth Portfolio rose by 4.6%. A new purchase in the Growth Portfolio was Edinburgh Worldwide which is managed by Baillie Gifford and has recently changed its objective to investing in mid and Small Cap stocks on a global basis. The managers have a good track record with this mandate which should generate strong returns over the medium term.
As at 28 February 2014
The value of shares and the income from them is not guaranteed and can fall as well as rise due to stock market movements. Past performance is not a guide to future performance. When you sell your shares, you might get back less than you originally invested. If markets fall, gearing can magnify the negative impact on performance. Changes in rates of exchange may have an adverse effect on the value, price or income of investments. Emerging Markets, Unquoted Companies and Smaller companies carry a higher degree of risk and their value can be more sensitive to market movement; their shares may be less liquid and performance may be more volatile. The fund may invest in hedge funds or private equity funds which are not normally available to individual investors, exposing the fund to the performance, liquidity and valuation issues of these funds. Such funds typically have high minimum investment levels and may restrict or suspend redemptions or repayment to investors. The asset value of these shares and its prospects may be more difficult to assess.