Fund manager commentary
After an unexpectedly strong year in 2013 most of the major global equity markets experienced a sharp pull back during January. This was probably due to a combination of factors. First, concerns over the Federal Reserve policy of tapering down its quantitative easing policy and the affect it might have on markets, particularly those of Asia and the Emerging Markets. Secondly, worries that the corporate earnings season may disappointment in the US and Europe and may necessitate further downgrades to 2014 forecasts. This would be interpreted negatively because following the gains of the last couple of years valuations, particularly in the US, have moved upwards to levels where further progress would have to be justified by a recovery in earnings and dividend growth. Against this background the FTSE All Share Index fell by 3.1% whilst that of the FTSE Equity Investment Instruments Index declined by 1.8% (both figures are total return). In these circumstances the Net Asset Value of the Income Portfolio was lower by 2.9% whilst that of the Growth Portfolio only fell by 1.5% (again both figures are total return).
As at 31 January 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.