Smoothed Growth Fund – GBP

Investment Objective

The fund aims to produce growth over the medium to long-term (5 to 10 years or more) while smoothing some of the ups and downs of short-term investment performance. The underlying fund spreads investment risk by investing in a range of different asset types, which currently includes European and international equities, property, fixed interest securities, index-linked securities and other specialist investments.

Investment Commentary

The conflict in the Middle East dominated financial markets. However, worries that disruption to energy supplies would fuel inflation and hit economic growth receded as the US and Iran reached a peace deal and oil prices dropped. Besides the Iran war, the continued demand for AI infrastructure and memory chips, in particular, was a powerful theme. Equity and bond markets both gained.

Global equities rallied, with the S&P 500 returning 15.2%, the best quarterly performance since the post-pandemic rally in 2020. However, Asia and emerging markets stood out. Korea’s technology-heavy stockmarket rose more than 80%, driven by gains from its large chipmakers. UK markets rose but lagged the broad global market, held back by weakness among oil stocks and limited exposure to tech stocks. China also underperformed, amid concerns about weak consumer demand.

In the bond market, falling oil prices helped ease concerns about the inflation outlook. UK government bonds (gilts) rose 2.0%, reversing some of the weakness in the first quarter, and outperforming US Treasuries and German bunds. US Treasuries were largely flat. Corporate outperformed government bonds with higher risk high yield debt the best performing asset class. Emerging market bonds delivered healthy returns, especially hard-currency government bonds.

Commodities struggled. Oil prices fell sharply after the peace deal and ended close to pre-conflict levels. Gold and silver were also weak. In currencies, the US dollar strengthened for the fourth consecutive quarter, particularly against the Japanese yen.

*Expected Growth Rates (EGR)

Expected Growth Rates are set periodically taking into account current and expected market conditions. They indicate potential returns over the medium to long-term.

Help investors set realistic expectations for growth. Provides an outlook for returns, assisting in long-term investment planning.