Charity Multi-Asset Fund Update – Q3 2023
Tom Montagu-Pollock and James Brennan provide an update on the third quarter of 2023 for the Charity Multi-Asset Fund.
The US economy continued to prove resilient over the third quarter with consumers maintaining their healthy spending patterns. Growth forecasts have been revised higher with the recessionary scenario no longer the base case. This contrasts with China which is grappling the consequences of over-investment in the real estate sector and weakening investor sentiment.
Despite the prevailing narrative of a ‘soft landing’ outcome in the US (a cyclical slowdown to control inflation with the avoidance of a recession), the S&P 500 posted its first negative quarter of 2023. In local currency terms, global equity markets also fell nearly -3% whilst in sterling terms they posted a small positive of +0.6%. In bond markets, yields rose to their highest levels since 2007, providing further headwinds for diversified multi-asset investors.
Against that backdrop, the fund generated a return of +0.5% for the quarter.
In terms of positioning, US inflation continues to fall while its economy remains relatively resilient. We are therefore taking advantage of the recent de-rating in equity markets to slightly increase our exposure across risk mandates. Importantly, we remain underweight equity compared to our long-term strategic allocation. This reflects our view that economic growth is slowing and that it is too soon to declare victory against “sticky” core inflation. We are comfortable with our modest overweight position in government bonds. Bonds now offer attractive levels of income and could start to offer greater diversification benefits if the global economy slows more meaningfully. We continue to believe that alternatives have an important role to play in portfolios. Our view that many UK alternative investment companies are undervalued has been supported by recent corporate activity in the sector.
This article is issued by Cazenove Capital which is part of the Schroders Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested.
This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements.
All data contained within this document is sourced from Cazenove Capital unless otherwise stated.