Investors remained firmly fixated on economic data during March, looking for indications when central banks may look to make their first interest rate cut. Whilst the US Federal Reserve remained on hold, the release of the expectations of voting policy members suggests that we will still see three interest rate cuts this year. At the same time, they raised their economic growth forecast from 1.4% to 2.1% for 2024. The expectation of interest rate cuts remained despite a tick-up in inflation to 3.2%.

The Bank of England also held the base rate at the same level. Perhaps of more interest was the change in the voting pattern, with eight members voting for no change whilst one voted for a cut. This is a change from the previous meeting where there were still votes to hike. Perhaps the key influence behind this change was consumer price inflation, which came in lower than expected at 3.4%.

The Swiss National Bank were the first mover of the major developed economies, reducing their policy rate by 0.25% to 1.5%, taking the market by surprise. The Bank of Japan meanwhile was moving in the opposite direction, bringing to an end eight years of negative interest rates. Whilst the move was marginal, it was perhaps more psychological.

The prospect of interest rate cuts was positive for UK fixed income, in particular government and investment grade bonds, which are more sensitive to such moves.
It was also a positive month for equity markets, in particular the UK and the more economically sensitive mid-cap stocks.

The Fund posted a return of 2.37% for March, a little behind the sector average return of 2.75%.

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.