Performance as at 30 June 2021
Performance is after the annual fund charge, and before tax and membership fees (if applicable). For more information, see legal information and disclaimers.
What happened this quarter (3 months to 30 June 2021)
- Global bond markets had a mixed quarter, with bond prices rising in the US as yields fell from multi-month highs, while several European bond prices ended slightly lower.
- The move higher in US bond prices was of benefit to fund performance, with more than 40% of the portfolio in US-domiciled bonds. The move came despite economic data showing that US inflation hit its highest level in more than a decade, a scenario that tends to see bonds underperform.
- Perhaps offsetting the inflation data was the Federal Reserve, which maintained a relatively accommodative tone, saying it believes the current rise in inflation will be short-lived as the price rises are coming largely from sectors that were suppressed during the pandemic.
- Meanwhile, the fund also has significant exposure to French, Italian and German bonds (totalling about 15% of the portfolio). These holdings detracted from performance, with most European bonds ending slightly lower over the quarter.
- The fund’s bond selection strategy is based on qualitative and value measures, with a strong emphasis on Environmental, Social and Governance (ESG) considerations.
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