March 2024 Investment Summary

A positive month for the Passive range with returns ranging from +1.83% for Passive 1 to +2.44% for Passive 5.
*P Acc share class with data sourced from FE analytics as at 28 March 2024.

March 2024 was a positive month for portfolios generally.

Most major equity markets continued to rise in March as global stock markets recorded their best first-quarter performance in five years, led by the growing optimism for a global ‘soft landing’ and enthusiasm about artificial intelligence. Energy and Basic Materials led the sector-wise performance while Real Estate and Technology lagged.

Government bond prices were lower as the ten-year Treasury yield edged up to 4.20% from 4.25% over the month. Strong economic data has whittled away hopes for imminent interest rate cuts, as investors continue to revise lower their expectations on the number of cuts from the Fed in 2024.

The US labour market continued its strong start to 2024 as government data surpassed expectations to show payrolls increased by 303,000 in March, demonstrating the strength of the US labour market despite high interest rates. US consumer confidence remained stable in March, although households are still concerned on the impact of inflation, particularly around food and gas prices and the domestic political environment. Unemployment data cooled slightly to 3.8% surprising market expectations for it to remain at 3.9%. *

Conflict in the Middle East continues and has escalated further following suspected Israeli air strikes, raising fears of a wider conflict in the region. Shipping companies continue to divert vessels to avoid the possibility of attack, as Brent Crude increased to over $87/barrel from $84/barrel in March.

Central banks’ continue to keep monetary policy tight enough to drive inflation back towards the 2% target, there is growing evidence of a continued softening in prices. Central banks may be in a position to ease policy rates in the second half of 2024 but employment, activity and inflation data over the next few months will be critical to the evolution of their thinking. The US economy continues to look strong, with the prospect of a soft landing more likely.

While recent central bank meetings have suggested the next move in interest rates will be downwards, officials have been cautious to confirm when these cuts will be implemented, with a careful eye on data to ensure a sustainable route back to the inflation target.

WS Prudential Risk Managed Passive - Tactical asset allocation activity

With continued disinflation traction, setting the scene for the beginning of monetary policy loosening, alongside strong fundamentals in the US especially, the portfolio managers remain moderately overweight equities (+2.00%), with funding from European investment grade (-1.00%) and Cash (-1.00%).

Emerging Markets

The fund invests in emerging markets. Generally less well regulated than the UK. There is an increased chance of political and economic instability with less reliable custody, dealing and settlement arrangements. The market(s) can be less liquid. If a fund investing in markets is affected by currency exchange rates, the investment could either increase or decrease. These investments therefore carry more risk.

High Yield Bonds

The fund invests in high yield bonds. High yield bonds carry a greater risk of default than investment grade bonds, and economic conditions and interest rate movements will have a greater effect on their price. Income levels may not be achieved and the income provided may vary.

Value of Investments

The value of investments, and any income can fall, as well as rise, so you could get back less than you invested. Neither capital nor income is guaranteed.

Investments Long Term

Investments should be regarded as long term and are not suitable for money which may be needed in the short term, you should always have a sufficient cash reserve.

Property

The fund invests in Property funds, property shares or direct property. In particular the following risks will apply:- The property market is illiquid and this can, in exceptional circumstances, lead to times in which clients are unable to dispose of part or all of their holding. Property valuations are made by independent agents but are ultimately subjective and a matter of judgement. Property transaction costs are high (typically around 7% due to legal costs, valuations and stamp duty)

Derivative Exposure

The fund invests in derivatives as part of its investment strategy, over and above their use for Efficient Portfolio Management (EPM). Investors should be aware that the use of these instruments can, under certain circumstances, increase the volatility and risk profile of the Fund beyond that expected of a fund that only invests in equities. The fund may also be exposed to the risk that the company issuing the derivative may not honour their obligations which in turn could lead to losses arising.

Umbrella Liabilities

If the liabilities of one fund were to exceed its assets, the other funds within the scheme might have to transfer across money to cover the liabilities.

Solvency of Bond Issuers

If the fund you choose invests in bonds there is a risk that the issuer may default, resulting in a loss to the portfolio.

Returns Are Not Guaranteed

What you receive when you sell your investment is not guaranteed; it depends on how your investments perform.

Inflation

Inflation will reduce the real value of your investments in future.

Taxation and Tax Relief

Levels of taxation and tax relief are subject to change.