Investors remained focused on the disinflation theme through February. Inflation proved to be sticky, as many commentators had predicted, struggling to make that last leg back down towards the 2% target, which so many developed market central banks have set for them. Inflation of course continues to be one of the main focuses for investors in terms of trying to determine when they think the US Federal Reserve, Bank of England and ECB will begin to cut rates. The high expectations that we saw in December last year have slowly but surely been eroded. Whilst some still remain priced in, there are a few commentators now questioning whether they will cut at all.

As may be expected, this uncertainty and reversal of some rates cut expectations had a negative impact on UK fixed-income assets. In particular, those most sensitive to those views such as gilts and investment grade corporate bonds, both of which posted a negative return for the month. Less interest rate sensitive areas of the market, however, including high yield, and non-investment grade bonds, fared much better, posting a positive return for the month.

Despite the uncertainty, it was a relatively positive month for equities. After a torrid time recently, there was something of a rebound in Chinese equities, helping to send the Hang Seng over 6.5% higher in local currency terms. Hot on their heels were the US, European and Japanese equity markets, each posting a return of circa 5%. UK shares were lacklustre, only just making it into positive territory.

The Fund underperformed the sector average during the month, returning 1.23% and 1.71% respectively.

Further information about the fund can be found on the Fund’s website: MIDSF.com

This article is for information purposes only and should not be construed as advice. We strongly suggest you seek independent financial advice prior to taking any course of action.

The value of this investment can fall as well as rise and investors may get back less than they originally invested. Past performance is not necessarily a guide to future performance.

The Fund is suitable for investors who are seeking to achieve long term capital growth.

The tax treatment of investments depends on the individual circumstances of each client and may be subject to change in the future. The above is in relation to a UK domiciled investor only and would be different for those domiciled outside the UK. We strongly suggest you seek independent tax advice prior to taking any course of action.

Past performance is not a guide to future performance.