January was a mixed month for asset class returns. Some of the exuberance from December was unwound with investors thinking they were a little bit ahead of themselves in terms of how quickly interest rate cuts would come. Inflation proved a bit more stubborn, and the US jobs market remained strong. In terms of fixed income, this was to the detriment of UK gilts and investment grade corporate bonds, with both posting a negative return. High yield, non-investment grade bonds meanwhile posted positive returns, with credit conditions remaining favourable.

Returns posted by equity markets were mixed. At the bottom end of the table, we had the Hang Seng, which fell almost 10% on a total return basis in local currency terms. Sentiment remained very weak despite the market trading at low points in terms of valuation, and efforts by the authorities to shore up confidence. Japanese equities meanwhile were some of the strongest, with loose monetary policy and positive corporate governance efforts leaving investors feeling positive.

A number of adjustments to the underlying holdings. With negative sentiment continuing to weigh heavily over the Chinese stock market, we took the decision to reduce the FSSA Asia Focus fund, where material weighting was held in this market. We also trimmed our position in the R&M European fund. Whilst the valuation of European equities is at around long-term average, there could still be pressure on earnings here, especially with Germany entering a technical recession. Finally, the position in silver was exited. Higher real yields are now available from fixed income, making the allure of precious metals less attractive.

The Fund outperformed the sector average during the month, returning 0.09% and -0.02% 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.