The Fund posted a return in line with the IA Flexible Investment sector average during the month, returning 3.78% and 3.84% respectively.

After their strong rebound in April equity markets continued to post gains through May. It was not plain sailing by any means however, with markets enduring falls during the first half of the month before rebounding strongly. Although economic data remained significantly weaker than prior to the COVID-19 outbreak and concerns regarding corporate earnings remain, particularly given the lack of guidance provided by companies themselves, the action taken by central banks in particular continued to support markets.

Within fixed income we saw a stronger performance from credit, in particular high yield (non-investment grade) bonds, as spreads tightened. Investment grade bonds were also positive in the month. In the US we have seen the US Federal Reserve commit to buying both corporate and high yield bonds through exchange traded funds (ETF’s). This has not only provided support in the secondary market pricing but has also led to record issuance of new bonds by corporates.

Fund positioning remains similar to that seen at the end of April, with an underweight in equities, overweight in fixed income, alternatives and cash relative to the neutral allocation. Whilst markets were positive during the month we remain cautious given the uncertainty regarding the global economy, the pace at which it can recover and the subsequent impact on corporate earnings. We also remain wary of equity market valuations, both on absolute terms and relative to their own history. Whilst liquidity from central banks can continue to ‘float all boats’, at some point investors may just revert back to fundamentals. Much is dependent on the shape of recovery, be that a V, U, W or ‘Nike swoosh’. There is an abundance of alphabet driven scenarios to choose from! There was no adjustment to positions during the month, only that due to market movements.

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.