October proved a more difficult month for equity markets to generate a positive return. After a very strong September there was the inevitable bout of profit taking, with investors waiting for more signs of stimulus from the Chinese authorities. We saw weakness across European and UK equity indices, with the S&P 500 also ending in negative territory following weakness in tech stocks at the end of the month. The Japanese Topix was one index which did manage to post a gain, supported by the Bank of Japan keeping interest rates on hold.

Interest rate sensitivity remained the dominant driver of performance within UK fixed income markets during October. This meant that non-investment grade bonds were the strongest performers given their lack of correlation to it. Credit spreads, i.e. the extra yield investors demand to hold these bonds rather than gilts remained at narrow levels, with corporate earnings reports remaining supportive. There was a greater level of volatility in gilt and investment grade markets, where sensitivity to rates is higher. After initially posting losses, both had broken back above breakeven by the middle of the month, but then fell away again in the second half. Whilst further cuts from key western central banks are still expected, the market reigned back previous expectations. This was despite inflation in the US, UK and Euro area continuing to trend towards or achieve the desired target level.

The Fund underperformed the IA Flexible Investment sector average during the month, returning -0.57% and 0.16% 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.