Charity Multi-Asset Fund Update

Tom Montagu-Pollock, Fund Manager, Ahmet Feridun, Deputy Chief Investment Officer, Harry Hitchcock and Naomi Morris provide an update on the Charity Multi-Asset Fund.

The Fund has generated a return of -6% for the first 9 months of 2022 compared with Global equities -10%, UK Government Bonds -25% and the peer group -13%.

We expect that higher interest rates will lead to recessions in the UK, US and Eurozone. In this environment, we remain underweight equity, with a clear preference for higher-quality companies. Before adding back to equities, we want to see the prospect of recession reflected in earnings estimates. We are also looking for weakening of labour markets, which could be a signal that interest rates are at or near a peak. We recently upgraded our view on fixed income to neutral and are gradually increasing our exposure to government bonds. We also continue to favour alternative assets, including commodities. Historically, they have helped to protect from inflation shocks. Metals should also benefit from strong demand as a result of electrification and energy transition. High levels of inflation in the UK have made meeting inflation plus return targets more challenging in the shorter term. Despite this, we remain confident in the ability to meet inflation plus targets over the longer term.