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Global Growth Masterclass 2013

Fund commentaries

May 2013

Dynamic Bond Trust: Quarter 1 2013

During the first quarter we were active in managing the fund’s net exposure to non-financial investment grade bonds, trading tactically around the disruptive events of the Italian election and Cyprus bail out.

We also sought to give the portfolio more of an inflation-linked bias, kept the duration of the portfolio low and were alert for selected opportunities in peripheral Europe. This year, economic and corporate fundamentals are likely to come to the fore.

Fixed Interest Trust: Quarter 1 2013

Our trading during the first quarter was mainly centred on positioning the fund in attractive opportunities in parts of the market that support our macro views. This involved the US, and to an extent Scandinavia, while we took profits in some of the portfolio’s European names.

Looking forward, a focus on individual companies’ fundamentals is likely to become increasingly important, with future performance depending more on company selection than asset class or sector bias.

High Income Trust: Quarter 1 2013

The fund remains overweight in the UK and emerging markets, with top performers during the first quarter including Thomas Cook (UK), Minerva (Brazil) and CFG Invest SAC (Peru).

We have reduced our underweight to peripheral European names, reflecting a more positive outlook on economic growth, while also rebalancing the portfolio more in favour of the US.

Managed Monthly Income Trust: Quarter 1 2013.

Worries over an initially inconclusive Italian election and, later in the quarter, a sudden crisis in Cyprus were pockets of nervousness in an otherwise positive quarter for fixed income.

We are positive on the prospects for recovery in the US autos sector and added several names that could benefit from this theme. Meanwhile, being wary of euro zone risk, we sold down a couple of European names.

Sterling Income Fund: Quarter 1 2013

Fund duration was reduced over the quarter, from 5.9 years to about 3.5 years, in an effort to minimise interest rate volatility and position the fund to earn returns from credit.

Looking forward, a focus on individual companies’ fundamentals is likely to become increasingly important, with security selection rising in importance versus asset class or sector bias.

April 2013

Dynamic Bond Trust: Quarter 1 2013

During the first quarter we were active in managing the fund’s net exposure to non-financial investment grade bonds, trading tactically around the disruptive events of the Italian election and Cyprus bail out.

We also sought to give the portfolio more of an inflation-linked bias, kept the duration of the portfolio low and were alert for selected opportunities in peripheral Europe. This year, economic and corporate fundamentals are likely to come to the fore.

Fixed Interest Trust: Quarter 1 2013

Our trading during the first quarter was mainly centred on positioning the fund in attractive opportunities in parts of the market that support our macro views. This involved the US, and to an extent Scandinavia, while we took profits in some of the portfolio’s European names.

Looking forward, a focus on individual companies’ fundamentals is likely to become increasingly important, with future performance depending more on company selection than asset class or sector bias.

High Income Trust: Quarter 1 2013

The fund remains overweight in the UK and emerging markets, with top performers during the first quarter including Thomas Cook (UK), Minerva (Brazil) and CFG Invest SAC (Peru).

We have reduced our underweight to peripheral European names, reflecting a more positive outlook on economic growth, while also rebalancing the portfolio more in favour of the US.

Managed Monthly Income Trust: Quarter 1 2013.

Worries over an initially inconclusive Italian election and, later in the quarter, a sudden crisis in Cyprus were pockets of nervousness in an otherwise positive quarter for fixed income.

We are positive on the prospects for recovery in the US autos sector and added several names that could benefit from this theme. Meanwhile, being wary of euro zone risk, we sold down a couple of European names.

Sterling Income Fund: Quarter 1 2013

Fund duration was reduced over the quarter, from 5.9 years to about 3.5 years, in an effort to minimise interest rate volatility and position the fund to earn returns from credit.

Looking forward, a focus on individual companies’ fundamentals is likely to become increasingly important, with security selection rising in importance versus asset class or sector bias.

Asian Income Trust: Quarter 1 2013

The fund’s large weighting to Australian stocks was a particular highlight, with financial and defensive names such as ANZ Bank, Suncorp, Woolworths and Westfield contributing positively.

We continued to accumulate holdings in toll road companies across the region, with good cash flows and good yields for these assets arising out of improving economic fundamentals.

UK Equity Income: Quarter 1 2013 review

The first quarter was a more positive environment for stock-picking, with increased return dispersion within sectors and a less macro-driven market.

The fund’s focus on strong, dividend-raising companies was rewarded with outperformance from the likes of Prudential and Hargreaves Lansdown.

We are cautiously optimistic on the outlook for equities in general, with quality high yield stocks likely to attract attention from investors.

All Stocks Index Linked Gilt Index Trust: March 2013

A rise in euro zone tensions during March as Cyprus sought an EU/IMF bailout saw investors seeking safe havens, such as gilts and German bunds. Longer-dated gilts generally outperformed, with conventional 10-year yields falling from 2.0% to 1.8%.

All Stocks Gilt Index Trust: March 2013

Gilt prices rose in March, with the market rallying alongside their ‘safe haven’ peers as the poorly-handled EU/IMF bailout of Cyprus sparked some renewed concerns over the stability of the euro zone bloc. Longer dated issues broadly outperformed, with 10-year gilt yields falling from 2.0% to 1.8%, mirroring similar falls in French and German yields as investors favoured safe havens.

Asian Income Trust: March 2013

Following early strength in the month, Asian markets retreated during March as egregious bailout terms for Cyprus rocked global confidence and the completion of the leadership transition in China led to increased policy uncertainty.

Dynamic Bond Trust: March 2013

Trading in the portfolio during March was relatively light, as we believed that the portfolio was positioned appropriately for the prevailing environment. What action we did take was focused on taking out a little bit of risk overall and modifying slightly where we are taking risk. 

Equity Trust: March 2013

Purchases for this month include; BG Group, Esure, Lloyds & Schroders. Sales for this month include; Halfords and Hendersons. The fund also reduced its exposure to the mining sector, where we see prospects deteriorating.

European Absolute: March 2013

The outcome of the Cyprus bailout, or rather bail-in, deal was rather confused and, following uncertainty caused by the Italian elections, contributed to an overall more cautious mood in Europe. While Spanish and Italian markets were weak, overall European markets held up well giving rise to some hope that contagion from Cyprus may be limited.

European Index Trust: March 2013

European equity markets rose initially but then retreated as policymakers struggled to agree on a package to rescue Cyprus and restructure its heavily indebted banking system.

European Trust: March 2013

The outcome of the Cyprus bailout, or rather bail-in, deal was rather confused and, following uncertainty caused by the Italian elections, contributed to an overall more cautious mood in Europe. While Spanish and Italian markets were weak, overall European markets held up well giving rise to some hope that contagion from Cyprus may be limited.

Fixed Interest Trust: March 2013

UK government bond yields fell over the month as European political risks re-emerged. This was the main driver of corporate bond market returns. Fitch put the UK’s credit rating on negative watch, although the impact on gilt yields from concern over the sustainability of the UK’s public finances was outweighed by increased risk aversion and demand for the safest assets. 

Global 100 Index Trust: March 2013

Equity markets advanced as loose monetary policy and improving US economic data continued to fuel investors’ appetite for riskier assets. US data included news of an unexpectedly sharp rise in durable goods orders and a further improvement in the housing market.

Global Emerging Markets Index Fund: March 2013

March was a difficult month for emerging equity markets which retreated and underperformed developed markets. Investor confidence was knocked by the financial crisis in Cyprus and concern about the economic outlook in China.

Global Health And Pharmaceuticals Index Trust: March 2013

Health care stocks rose strongly in March, broadly outperforming even the robust gains of wider global stock markets that rallied in response to the latest round of supportive economic data, particularly in the US and China.

Global Technology Index Trust: March 2013

Technology shares broadly delivered further gains in March, supported by economic data that reassured over the strength of the global recovery, particularly in the US and China.

Growth Trust: March 2013

March was a quiet month for activity in the fund. The only significant change was the addition of a holding in Howden Joinery at the expense of Whitbread, which had reached our price target.

High Income Trust: March 2013

High yield markets continued the trend of good performance in the first quarter of 2013. At the issuer level most of the bonds produced good performance. UK companies such as Thomas Cook did particularly well, as did exposure to merging market companies such as Minerva, the Brazilian beef producer.

International Index Trust: March 2013

International equities advanced as loose monetary policy and improving US economic data continued to fuel investors’ appetite for riskier assets. US data releases included news of an unexpectedly sharp rise in durable goods orders and a further improvement in the housing market.

Japan Index Trust: March 2013

Japanese equities gained further ground last month on optimism that the authorities will successfully engineer an economic recovery. Incoming Bank of Japan Governor Haruhiko Kuroda’s commitment to “decisive monetary easing” has been well received by investors.

Managed Monthly Income Trust: March 2013

UK government bond yields fell over the month as European political risks re-emerged. This was the main driver of corporate bond market returns. Fitch put the UK’s credit rating on negative watch, although the impact on gilt yields from concern over the sustainability of the UK’s public finances was outweighed by increased risk aversion and demand for the safest assets.

North American Trust: March 2013

US equities continued to rally despite signs of moderating economic growth. Healthcare, consumer staples and utilities were the big winners over the quarter as investors sought safety and yield over cyclicality. Materials and information technology stocks underperformed versus the broader market.

Pacific Growth Trust: March 2013

Asia Pacific markets declined in March as the euro zone periphery debt crisis was back in focus, with inflation and slowing growth fears resurfacing in China. The best performing markets were New Zealand (+2.2%), Thailand (+2.2%) and Malaysia (+2.1%). The underperformers were China (-5.1%), Korea (-4.6%) and Hong Kong (-1.4%).

Pacific Index Trust: March 2013

Asian equity markets retreated as investor confidence was shaken by the financial crisis in Cyprus and concerns about the economic outlook in China.

Sterling Income Fund: March 2013

UK government bond yields fell over the month as European political risks re-emerged. This was the main driver of corporate bond market returns. Fitch put the UK’s credit rating on negative watch, although the impact on gilt yields from concern over the sustainability of the UK’s public finances was outweighed by increased risk aversion and demand for the safest assets.

UK 100 Index Trust: March 2013

UK shares rose in the first half of the month thanks to investors’ growing appetite for risk. However, the market’s upward progress was curtailed by the crisis in Cyprus and concern about the UK economy, following the Office for Budget Responsibility’s decision to cut its GDP growth forecast to 0.6% for 2013.

UK Active Opportunities Trust: March 2013

Purchases for this month include; Esure, Filtrona and Lloyds and sales were made in Elementis, Halfords, Intercontinental Hotels and SDL.

UK Equity Income: March 2013

March saw the end of the 2012 reporting season with an increased dispersion of delivery against results across the market. Thankfully, this resulted in greater dispersion of stock performance and stock picking became the greatest driver of share prices.

UK Index Trust: March 2013

UK shares rose in the first half of the month thanks to investors’ growing appetite for risk. However, the market’s upward progress was curtailed by the crisis in Cyprus and concern about the UK economy, following the Office for Budget Responsibility’s decision to cut its GDP growth forecast to 0.6% for 2013

UK Property Trust: March 2013

Sentiment for the prime end of the property sector has been improving, with an increasing appetite from debt providers and direct property investors alike. Overseas demand remains strong, and is also supported by a good domestic demand from UK institutions. Desired exposure is still focused very much on prime quality stock and the low volume of available transactions with prime property characteristics may start to put upward pressure on capital values. In contrast, capital values continue to decline for secondary quality property.

UK Smaller Companies Trust: March 2013

Domestic sectors did well, with both retailers and house builders up strongly. Mining stocks were performed poorly with the sector falling 13% in the month.

US Index Trust: March 2013

The US equity market gained ground last month as economic data, including an unexpected jump in durable goods orders and improving housing market figures, exceeded expectations.

Index fund charges reduced

RDR creating a watershed moment for interest in index funds.

March 2013

UK Equity Income: February 2013

The fund outperformed over the month as the 2012 reporting season showed that financial delivery of companies remains highly dispersed in this challenging (albeit improving) macro-economic backdrop.

UK Absolute: February 2013

The fund marked its third anniversary with strong performance in February. The outstanding contributors were long positions in the online gaming sector, with Playtech, bwin.party, 888 Holdings and money transfer service Optimal Payments rising sharply on positive regulatory developments in the United States.

All Stocks Gilt Index Trust: February 2013

Gilt prices rose in February, against the backdrop of a broad easing in global government bond yields.

Asian Income Trust: February 2013

Asia Pacific markets moved little over February in local currency terms, but the impact of the fall in sterling meant that the FTSE AW Asia Pacific (ex Japan) Index registered a 5.2% total return to a UK based investor.

Dynamic Bond Trust: February 2013

With little return to be had from interest rates for now, we have sought to take advantage of credit market volatility. This has mainly been through investment grade positioning. The fund moved from a significant net short position at the end of January towards a more neutral position by month-end, locking in gains from spreads moving wider in the wake of the Italian election.

European Absolute: February 2013

The main event in Europe during February was the Italian general election which returned no clear winner. The centre-left and centre-right parties were split apart by the surprisingly strong showing of the Five Star Movement, the anti austerity party led by comedian Beppe Grillo.

European Index Trust: February 2013

European stock markets rose slightly in February, but renewed concern about the outlook for the euro zone, following an inconclusive outcome in Italy’s parliamentary elections, weighed on the market at month end.

Global 100 Index Trust: February 2013

Global equities rose in February, but the positive effect from strengthening US and Chinese data was partially offset by renewed concerns over the euro zone crisis.

Global Emerging Markets Index Fund: February 2013

Emerging equity markets declined in February. Although economic indicators from the US were broadly encouraging, as the month progressed concerns grew that policymakers would fail to reach agreement ahead of the so-called sequester of US$85 billion in automatic spending cuts.

Global Health And Pharmaceuticals Index Trust: February 2013

Health-related stocks delivered robust returns in February amid optimism over the improving global economic outlook and encouraging news flow from a range of international health care companies.

Global Technology Index Trust: February 2013

Technology stocks delivered good returns in February, reflecting optimism that improving global economic data should support demand for IT products and services.

Growth Trust: February 2013

Two new holdings were added to the fund in February, BG Group and IAG (International Consolidated Airlines Group). We bought back into BG Group following production downgrades and underperformance. We recently had a constructive meeting with their new CEO and in our view the delivery of production and projects has improved.

High Income Trust: February 2013

At the issuer level, most of the bonds in the portfolio produced moderately good performance. The fund’s exposure to Minerva, the Brazilian beef producer, led the way in terms of contribution.

International Index Trust: February 2013

International equities rose in February, but the positive affect from strengthening US and Chinese data was partially offset by renewed concerns over the euro zone crisis.

Japan Index Trust: February 2013

Japanese equities climbed in February following news that Haruhiko Kuroda, an advocate of aggressive monetary easing, had been nominated as the next Bank of Japan governor.

UK Smaller Companies Trust: February 2013

The Numis Small Companies ex Investment Trust (NSCIxIT) price index rose 4.8% in February with the FTSE All Share rising 1.9%.

US Index Trust: February 2013

US equities gained further ground last month although progress was modest in comparison to the upward move the market experienced in January. As the month progressed, concern grew that the two main political parties would fail to reach agreement ahead of the so-called sequester of US$85 billion of automatic spending cuts.

North American Trust: February 2013

The S&P 500 was up 1.1% in February, adding to its impressive run of returns since last summer. Consumer staples, telecom services and industrials were the best performing sectors over the period. Materials, energy and IT lagged behind the broader market.

Pacific Growth Trust: February 2013

Asia Pacific markets moved higher in a period of light news flow due to the Chinese New Year.

Pacific Index Trust: February 2013

Asian equities rose, outperforming global peers, as stronger-than-expected US economic data boosted investor sentiment.

UK 100 Index Trust: February 2013

UK equities rose in February, although progress was relatively modest in comparison with the previous month. Investors remained in a broadly positive mood, shrugging off Moody’s decision to downgrade the UK from its top-tier AAA credit rating. However, renewed concern about the outlook for the euro zone, following an inconclusive outcome to Italy’s parliamentary elections, weighed on the market at month end.

UK Active Opportunities Trust: February 2013

February was another buoyant month for UK equities and another busy month for the fund. We added to positions in what we believe are growth companies, as well as some economically sensitive stocks. Defensive shares have been reduced.

UK Alpha Trust: February 2013

February was another positive month for UK equities, which returned 2.3%, and an extremely positive month for the fund, which made up the lost performance of 2012. Our holdings in the technology sector performed particularly well.

UK Index Trust: February 2013

UK equities rose in February, although progress was relatively modest in comparison with the previous month. Investors remained in a broadly positive mood, shrugging off Moody’s decision to downgrade the UK from its top-tier AAA credit rating.

UK Property Trust: February 2013

The investment market appears to be generally more optimistic in its expectations compared to the final few months of 2012, and there are suggestions of debt availability increasing as banks, overseas funds and US opportunity funds have highlighted their intentions to allocate more to UK property during the course of the year.

Sterling Income Fund: February 2013

UK government bond yields fell as an uncertain Italian election result grew more likely which increased the risk of a disorderly outcome and contagion to other European markets.

Fixed Interest Trust: February 2013

UK government bond yields fell as an uncertain Italian election result loomed, increasing the risk of a disorderly outcome and contagion to other European markets.

Managed Monthly Income Trust: February 2013

UK government bond yields fell as an uncertain Italian election result grew more likely, increasing the risk of a disorderly outcome and contagion to other European markets.

UK Property Trust Update: March 2013

Our property team give an update on the state of the Property market and detail how our UK Property Trust is positioned.

February 2013

Growth Trust: January 2013

The fund added new positions in Shire Pharmaceuticals and HSBC during January, while adding to Melrose.

All Stocks Index Linked Gilt Index Trust: January 2013

Although conventional gilts delivered negative total returns in January as easing euro zone tensions and a partial resolution of the US ‘fiscal cliff’ saw core government bonds lose some of their ‘safe haven’ status, index-linked issues comfortably outperformed.

All Stocks Gilt Index Trust: January 2013

Gilt prices fell in January, with global government bond yields rising as investors switched into risk-based assets, such as equities, amid some relief over the deal to prevent the worst-case US fiscal cliff scenario.

Asian Income Trust: January 2013

Asia Pacific markets continued the rally throughout January, as both Chinese and US economic data improved.

Dynamic Bond Trust: January 2013

Positive credit market performance tailed off in the second half of January as political uncertainty in Italy and allegations of corruption within Spain's ruling party dented investor exuberance.

Equity Trust: January 2013

Among materials companies, the fund extended its existing overweight stance towards our favoured mining company, Rio Tinto. However, we lowered our overall exposure to the mining sector, reducing our holding in Antofagasta and lowering exposure to African Barrick Gold after a suitor abandoned a takeover bid.

European Absolute: January 2013

The contraction in 10 year yields in peripheral Europe reflected further easing of political uncertainty in Europe; this has continued to support equities as investors sought to move further up the risk scale.

European Index Trust: January 2013

European equity markets started the year on a positive note as investors were encouraged by further evidence that financial conditions in the euro zone were stabilising.

European Trust: January 2013

The contraction in 10 year yields in peripheral Europe reflected further easing of political uncertainty in Europe; this continued to support equities as investors sought to move further up the risk scale.

Fixed Interest Trust: January 2013

December's strong market rally continued in the first two weeks of January before investors began to worry about political instability in Europe.  While the strong start was sufficient that corporates outperformed equivalent maturity government bonds, rising yields meant that the asset class posted a negative return. 

Global 100 Index Trust: January 2013

Equities began the year on a positive note, as growing optimism over the global economic outlook provided the momentum for a third successive monthly gain, propelling stocks to their highest level in four and a half years.

Global Emerging Markets Index Fund: January 2013

Emerging market equities began 2013 on a positive note as a last-minute deal to avoid an automatic tightening of US fiscal policy underpinned sentiment. Stronger economic data from China also reassured investors, although towards month-end markets gave up some ground as investors were temporarily unnerved by news the US economy has shrunk during the fourth quarter of 2012.

Global Health And Pharmaceuticals Index Trust: January 2013

Global healthcare stocks delivered strong gains during January, rising broadly in line with wider global equity markets. Sentiment was driven by relief over the partial resolution of the US fiscal cliff and some improvement in the global economic outlook, notably in the US and the Pacific Rim.

High Income Trust: January 2013

High yield bonds continued their trend of strong performance into 2013. The Legal & General High Income Trust rose by 0.98% during January 2013, placing it in the first quartile of its IMA sector for the period.

International Index Trust: January 2013

Equities began the year on a positive note, as growing optimism over the global economic outlook provided the momentum for a third successive monthly gain, propelling stocks to their highest level in four and a half years.

Japan Index Trust: January 2013

Japanese equities outperformed other major markets in local currency terms last month.

Managed Monthly Income Trust: January 2013

December's strong market rally continued in the first two weeks of January before investors began to worry about political instability in Europe.  While the strong start was sufficient that corporates outperformed equivalent maturity government bonds, rising yields meant that the asset class posted a negative return. 

North American Trust: January 2013

Risk assets continued to rally on signs of improving global GDP growth and supportive monetary policy. Energy, healthcare and financials were the best performing sectors over the period.

Pacific Growth Trust: January 2013

Asia Pacific markets continued the rally throughout January, with Chinese and US economic data improving. The FTSE AW Asia-Pacific (ex Japan) total return index rose 5.4% in sterling terms and by 3% in local terms.

Pacific Index Trust: January 2013

Asian stock markets made an encouraging start to 2013 as a last-minute deal to avoid an automatic tightening of US fiscal policy was agreed in the early hours of the New Year.

Sterling Income Fund: January 2013

December's strong market rally continued in the first two weeks of January before investors began to worry about political instability in Europe.  While the strong start was sufficient that corporates outperformed equivalent maturity government bonds, rising yields meant that the asset class posted a negative return. 

UK 100 Index Trust: January 2013

Growing optimism about the outlook for the global economy boosted the UK stock market in January, with the FTSE All-Share Index ending the month up 6.4%.

UK Active Opportunities Trust: January 2013

January was a buoyant month for equities in general and the fund in particular. In recent months we had adjusted strategy towards more economically-sensitive companies and emphasised growth as a theme.

UK Alpha Trust: January 2013

The fund produced strong performance in January, driven by a number of companies, predominantly due to positive trading updates. These included companies Internet Q, Globo, Wandisco, Optimal Payments, Smart Metering Systems and Central Asian Metals, who all issued better-than-expected statements.

UK Index Trust: January 2013

Growing optimism about the outlook for the global economy boosted the UK stock market in January. Although the mid-cap FTSE 250 Index marginally underperformed large cap stocks; it did not provide strong evidence that the period of outperformance from smaller companies has come to an end.

UK Property Trust: January 2013

Market activity was relatively quiet in January, although this is normal for the start of the year.

UK Smaller Companies Trust: January 2013

Most sectors had a positive return, with technology hardware returning 14.6% and financial services up 9.3%.

UK Special Situations Trust: January 2013

Among IT companies, we extended our overweight stance towards Nanoco; the quantum dot lighting developer has signed a landmark licensing deal with Dow Electronic Materials. The fund established a new position in Globo, a software company capitalising on trends in the mobile market.

US Index Trust: January 2013

The US stock market started 2013 on a positive note as investors were relieved that policymakers finally agreed a last-minute deal to avoid an automatic tightening of US fiscal policy. Some positive corporate earnings announcements, and evidence of stronger growth in China, also bolstered sentiment.

UK Absolute: January 2013

The fund had a strong January, with  positive contributions coming from long positions in oil and gas engineering firm Lamprell (closed during the month after a strong recovery), chemical company Oxford Catalysts, easyJet, plastics business Carclo and Vectura, a pharmaceutical company specialising in treatments for respiratory diseases. A short position in a temporary power company also contributed. 

UK Equity Income: January 2013

Performance during January benefited from the strength of a number of our dividend growth holdings with Burberry, Weir and Prudential all beneficiaries of a fall in sterling and the perceived improvement in the global growth outlook.

UK Special Situations Trust: March 2013

At the stock level the largest positive contribution was from Iofina (0.7%), a stock which was added to and trimmed during the period.

Asian Income Trust: Quarter 4 2012

The best performer in the portfolio was Arrium, which recovered sharply from weakness in the prior quarter during which iron ore prices had fallen. Some of the portfolio’s smaller China exposures also performed well with Anhui Expressway and Soho China both rising sharply and outperforming the Chinese market.

Dynamic Bond Trust: Quarter 4 2012

The fund posted positive returns in each of the three months of the quarter, with credit and interest rates positioning adding value over the period. With positive credit market performance continuing through December, we took the opportunity for profit-taking.

Fixed Interest Trust: Quarter 4 2012

Riskier sectors of global credit markets outperformed lower beta sectors during this period. On a relative basis we therefore lost some ground to peers who take a more aggressive approach.

Growth Trust: Quarter 4 2012

There was little on a sector level that had a significant negative impact – the underperformance was chiefly down to stock-specific issues.

High Income Trust: Quarter 4 2012

Lower-quality high yield bonds continued to outperform, which worked against the fund’s bias towards higher quality debt. This was a drag on performance compared to our peers. To counter this we had an overweight position in emerging markets, a sector we like on fundamental, macroeconomic and valuation grounds.

Managed Monthly Income Trust: Quarter 4 2012

The fund’s allocation of 52% to BBB-BB rated bonds was a key contributor to outperformance over the quarter. This tactical positioning helped the fund benefit as riskier sectors of global credit markets, continued to outperform higher-rated bonds and defensive sectors.

Sterling Income Fund: Quarter 4 2012

Despite continued weak global growth risk assets performed well, with corporate bond markets outperforming low risk assets such as cash and government bonds by a considerable margin.

UK Absolute Fund: Quarter 4 2012

One of the key positive contributors to performance was our longstanding position in Easyjet. Other strong positions included Halfords, International Personal Finance and a short in a temporary power stock.

UK Alpha Trust: Quarter 4 2012

Naturally it was disappointing to see market sentiment turn away from our portfolio in Q4 after significantly outperforming in the previous quarter.

UK Equity Income Fund: Quarter 4 2012

The later months of 2012 saw a dramatic shift in equity markets, which represented a sharp rotation after a prolonged period of outperformance for typical income stocks.

All Stocks Index Linked Gilt Index Trust: December 2012

While conventional gilt prices drifted lower during December, losing some of their ‘safe haven’ status as euro zone tensions eased further, index-linked issues outperformed conventional gilts.

All Stocks Gilt Index Trust: December 2012

Gilts produced negative total returns in December. Prices fell amid further easing in euro zone tension and gilts lost some of their ‘safe haven’ appeal. Meanwhile, despite the economy’s return to growth during the third quarter, there is concern that the continued and significant economic growth needed to help the government meet its deficit reduction targets will not be achieved.

Asian Income Trust: December 2012

Asia Pacific markets rallied into the year end due to optimism that the US fiscal cliff would be averted and that China’s economy was improving.

Dynamic Bond Trust: December 2012

With a positive credit market performance continuing through December, we took the opportunity to take profits on bonds which had rallied significantly. As a consequence, risk was reduced over the month. 

Equity Trust: December 2012

During December, we raised the fund’s exposure to selected mining companies, taking the view that more positive Chinese economic data should result in a favourable demand outlook. We extended our existing bias towards BHP Billiton and added further exposure to Rio Tinto. Meanwhile, we raised our existing holding in Hochschild, taking the view that the outlook for silver prices is improving.

European Absolute: December 2012

During December the European equity market gained 1.9% in euro terms, continuing the gains seen in recent months and leaving the market up 16.5% in euro terms for the year as a whole.

European Index Trust: December 2012

European equity markets ended 2012 on a positive note with the FTSE World Europe ex UK Index up 2.0% in local currency terms, equating to a 1.9% gain in sterling.

European Trust: December 2012

During December the European equity market gained 1.9% in euro terms, continuing the gains seen in recent months 16.5% in euro terms for the year as a whole.

Fixed Income Trust: December 2012

Government bond yields edged higher during the month, but this was offset by spreads tightening. Riskier sectors of global credit markets including high yield and lower rated investment grade bonds and financials continued to outperform higher rated bonds and less risky sectors.

Global 100 Index Trust: December 2012

Global equities rose in December amid further evidence the global economic outlook was improving.

Global Emerging Markets Index Fund: December 2012

Emerging market equities rose and outperformed developed markets amid further evidence that the global economic outlook was improving. The rally came as evidence of a pick-up in the US housing market became more widespread, while manufacturing data in China beat expectations.

Global Health And Pharmaceuticals Index Trust: December 2012

Global healthcare stocks generally ended the month higher, though the gains lagged behind those of the wider global markets as optimism over the outlook for the world economy saw investors favour more growth-orientated sectors.

Global Technology Index Trust: December 2012

Global technology stocks delivered positive returns in December amid broad optimism over the outlook for the global economy. However, unease over the looming US fiscal cliff weighed to some extent on technology shares relative to the wider markets, amid concerns that the prospect of automatic tax rises and spending cuts could send the world’s largest economy back into recession in 2013 should no compromise agreement be reached.

Growth Trust: December 2012

December was a quiet month for the fund with little activity and no new positions added.

High Income Trust: December 2012

High yield continued to perform well. The fund’s yield has been maintained ahead of the benchmark at 5.9%.

International Index Trust: December 2012

Global equities rose last month amid further evidence the global economic outlook was improving. The rally came as evidence of a pick-up in the US housing market became more widespread, manufacturing data in China exceeded expectations and worries about the outlook for the euro zone eased following the overhaul of Greece’s bailout programme in November.

Japan Index Trust: December 2012

Japanese equities ended the year on a positive note, rising strongly in December with the FTSE Japan Index returning 10.5% in yen terms, translating into a 3.9% gain in sterling.

Managed Monthly Income Trust: December 2012

Government bond yields edged higher during the month, but this was offset by spreads tightening. Riskier sectors of global credit markets including high yield and lower rated investment grade bonds and financials continued to outperform higher rated bonds and less risky sectors.

North American Trust: December 2012

The S&P 500 was up 0.7% in December as the partial resolution of the fiscal cliff and improving economic data helped support investor sentiment. A deal surrounding spending cuts could not be agreed and will need to be reached alongside a debate on the debt ceiling later in the first quarter.

Pacific Growth Trust: December 2012

Asia Pacific markets rallied into year end despite the impending US fiscal cliff and the resignation of Italian Prime Minister Mario Monti.

Pacific Index Trust: December 2012

Asia Pacific equities rose amid further evidence the global economic background was improving. The FTSE World Asia Pacific ex Japan index returned 3% in local currencies, equivalent to 1.7% in sterling.

Sterling Income Fund: December 2012

The fund had a beta of 1.6 at month-end (relative to a 5-15 year UK corporates index). To avoid any confusion, this index is broadly reflective of the universe across which the fund seeks investment opportunities rather than a benchmark against which performance and positioning is measured or managed.

UK 100 Index Trust: December 2012

UK equities ended the year on a positive note with the FTSE 100 Index advancing 1.0% over the month.

UK Absolute: December 2012

The fund fell 0.6% in December. Positive contributions came from a short position in an equipment rental company which released a profit warning, and from long positions in mid-cap software company, Advanced Computer Software, the Norwegian oil services company, Dolphin Group and specialty catalyst developer, Oxford Catalysts.

UK Alpha Trust: December 2012

Strong performance in two copper mining companies helped the fund during December. Central Asian Metals gave a positive production update and announced a generous dividend and good forward prospects. Weatherly International announced funding for a new project that the market had expected to require an equity fund raising for.

UK Equity Income: December 2012

December was a difficult month for the fund as small cap stocks and higher risk lower quality stocks, such as domestic banks outperformed, as risk premiums contracted when the market moved past any US Fiscal cliff and European sovereign fears.

UK Index Trust: December 2012

UK equities ended the year on a positive note with the FTSE All Share Index advancing 1.0% over the month. A notable feature was the strong performance of the domestically-orientated FTSE 250, which gained 3.0%.

UK Property Trust: December 2012

In December, capital values remained under pressure on secondary quality property and short income streams. In the wider market, however, banks seem to be more vocal about the progress they are making with defaulting loans. 

UK Smaller Companies Trust: December 2012

The Numis Small Companies ex Investment Trust (NSCIxIT) price index rose 3.47% in December with the FTSE All Share rising 0.92%. Year to date the NSCIxIT is up 26.2%. At the sector level, domestic stocks remained strong with all consumer services and house builders doing well again. Health care was less exciting and oil & gas producers also struggled to make a positive return.

UK Special Situations Trust: December 2012

In the financial sector, we added to our existing holding in Jupiter, extending our positive stance. We believe that the asset manager is well-placed to deliver earnings ahead of forecasts, boosted by the stock markets’ recovery. This additional exposure was funded from a reduction in our investment in peer Ashmore.

US Index Trust: December 2012

US equities underperformed other international markets last month, with a return on the FTSE USA Index of 0.9% in local currency terms translating into a loss of 0.5% in sterling as the dollar weakened.

Global Technology Index Trust: January 2013

Global technology stocks rose in January, buoyed by optimism that the US fiscal cliff of tax rises and spending cuts has been partially addressed. Sentiment also benefited from further positive economic data in the US and China and the latest easing in euro zone tensions.

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Breaking news

Views and insights

May 2013

Equity Insight: May 2013

It’s no use denying it any longer: equities are in a bull market. What else would one call it when global equities are up 120% over four years and a growing number of indices are making new all-time highs on almost a daily basis?

Fixed Income Focus: May 2013

LGIM’s Credit Strategist, Ben focuses on allocation within the credit funds as well as providing the credit input to macro strategies.

We have just been awarded SimplyBiz's Investment Partner of the Year

Find out how we've been making our expertise available to 2,000 member firms, helping them to help their clients through working with SimplyBiz.

April 2013

The power of index in portfolio construction

There are many different ways to construct a fund portfolio, but an increasingly popular method is a core and satellite approach that blends a core of index funds with a selection of proven active funds.

Equity Insight: April 2013

With investors starting to question whether Japanese equities are still an attractive investment after surging to current levels, we argue that the five key drivers of equities suggest the answer is yes.

Fixed Income Focus: April 2013

LGIM’s Credit Strategist, Ben Bennett focuses on allocation within the credit funds as well as providing the credit input to macro strategies.

Environmental Social And Governance Spotlight: March 2013

In this paper, we aim to highlight Japan’s latest developments in addressing board diversity and increased recognition as a value adding strategy for global competitiveness.

March 2013

Fixed Income Focus: March 2013

LGIM’s Credit Strategist, Ben Bennett focuses on allocation within the credit funds as well as providing the credit input to macro strategies.

Examining the great rotation

Recently there have been a lot of headlines about the ‘great rotation’, but the term is used inconsistently.

Index Intelligence: March 2013

Emerging markets are near the top of many investors’ favoured markets for 2013 - with good reason. These face few of the problems besetting developed markets and are expected to grow more strongly for some time.
However, many hold onto the notion that emerging markets exposure has to be actively managed, but in doing so, may hurt long-term returns.

Four years of low rates expert view

Interest rates in the UK have been at 0.5% since March 2009. That’s the lowest they’ve been in the over-300 year history of the Bank of England (BoE). We assess the future direction of interest rates.

Communique: March 2013

In this communiqué we look at the characteristics and drivers of this part of the bond universe and explore why it should be considered a permanent allocation for institutional investors.

February 2013

Equity Insight: February 2013

In February's edition of Equity Insight, LGIM Global Equity Strategist, Lars Kreckel evaluates the prospect of a revival in Mergers & Acquisitions activity.

Index Intelligence: January 2013

Low volatility indices are being presented as the new ‘big thing’ in index investing. Some make impressive claims about this new theme. Are these justified?

Economic news

May 2013

Asset Allocation: May 2013

The asset allocation committee is overweight equities, neutral bonds and underweight cash in May.

Macro Snapshot: May 2013

Investors have apparently refused to acknowledge any softer economic data, rather focusing on the liquidity injections boost provided by increasingly aggressive central bank measures. Most risky assets have pushed higher/tighter on ample liquidity and low volatility, with US equity markets reaching all-time highs.

Fundamentals: The peak of globalisation?

In this edition of Fundamentals, LGIM economist James Carrick argues globalisation may have peaked. China has moved up the value chain, becoming less competitive but also more self sufficient. This should increase global inflation as the benefits of offshoring come to an end.

Fundamentals: Bucking the market

In this edition of Fundamentals, Legal & General Investment Management's Credit Strategist Ben Bennett examines why investors need to be aware of the potential contradictions between short-term and long-term market influences.

April 2013

Asset Allocation: April 2013

The asset allocation committee is overweight equities and underweight credit in April.

Macro Snapshot: April 2013

The Italian election impasse remains unresolved and Cyprus has now waded into Europe’s negative press. The capital controls in Cyprus set a worrying precedent, but various asset markets have remained robust, hinting that investors still have faith in policymaker ability, albeit a little less than before. As we expected Europe to be a drag rather than a contributor on global growth this year anyway, our ‘muddle through’ outlook remains in place.

Fundamentals: The great rotation.

In this edition of Fundamentals, Legal & General Investment Management’s Equity Strategist Lars Kreckel examines the facts behind rumours of a Great Rotation and the broader prospects for equity markets.

March 2013

Asset Allocation: March 2013

The asset allocation committee is overweight equities and underweight credit in March.

Macro Snapshot: March 2013

The Italian election results and political gridlock came as a surprise to the market and contributed towards the more ‘risk-off’ sentiment in February. However, Italy has managed to function through 60 government changes in 66 years, and as such, the recent turmoil has not changed our ‘muddle through’ outlook.

February 2013

Asset allocation: February 2013

The asset allocation committee remained overweight equities and neutral credit in February.

Macro Snapshot: February 2013

The US has once again kicked the can down the road by suspending the debt ceiling for an additional three months. Japan has announced further fiscal stimulus and developed markets’ central banks appear reluctant to turn off the ‘monetary easing’ tap until the glimmers of light at the end of a very long tunnel shine brighter.

Fundamentals: Commerical property - priced to perform

In this edition of Fundamentals, Rob Martin, Director of Research for Legal & General Property, sets out the rationale for our expectation of improved property returns in 2013. With the environment remaining uncertain, portfolios need to be both resilient against the downside whilst also positioned to be able to respond to opportunities.

Macro Snapshot: December 2012

November saw the US Presidential elections, after which the fast-approaching fiscal cliff moved into focus for markets. Discussions between Democrats, who want to increase taxes, and Republicans, who want to cut government expenditure, are ongoing and likely to continue until the last moment. However, we do expect a deal to be done.

Income matters

May 2013

Fixed Income Focus: May 2013

LGIM’s Credit Strategist, Ben focuses on allocation within the credit funds as well as providing the credit input to macro strategies.

We have just been awarded SimplyBiz's Investment Partner of the Year

Find out how we've been making our expertise available to 2,000 member firms, helping them to help their clients through working with SimplyBiz.

Fixed Income: Finding a blueprint for performance

Consensus is hard to find in bond markets at present, with talk of a great rotation into equities growing ever louder. But with flows into debt funds continuing, the asset class still retains many advocates, particularly with long-term central bank commitments to low interest rates and ongoing quantitative easing.

March 2013

Fixed Income Focus: March 2013

LGIM’s Credit Strategist, Ben Bennett focuses on allocation within the credit funds as well as providing the credit input to macro strategies.

Communique: March 2013

In this communiqué we look at the characteristics and drivers of this part of the bond universe and explore why it should be considered a permanent allocation for institutional investors.

Corporate Bonds: Still life in the asset class - Februray 2013

After four years of strong returns, some market commentators are beginning to question the prospects for sterling corporate bonds. Michel Canoy, fund manager, LGIM, shares his views.

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