Performance as at 31 March 2020
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 31 March 2020)
- Bond prices rose sharply over the quarter as global central banks aggressively cut interest rates as the COVID-19 (coronavirus) outbreak worsened. Central banks also introduced a number of bond-buying and other accommodative policy measures to soften the economic blow.
- The fund’s GDP-weighted approach means it has a large exposure to US bonds, which helped performance.
- During the quarter, the Federal Reserve cut the fed funds rate by a total of 150 basis points, taking the target rate to zero and citing a deteriorating outlook for the global economy. Furthermore, the Fed announced a $700 billion quantitative easing programme, which included the purchase of government bonds and mortgage-backed securities.
- The sharp rise in bond prices saw yields fall to record lows. By the end of the quarter, the US 10-year government bond yield had fallen 125 basis points to 0.67%.
- European (ex-UK) bonds also performed well as the European Central Bank announced it would offer cheap loans to eurozone banks (long-term refinancing operations), hoping to boost lending to small-to-medium businesses. The central bank also said it would be temporarily increasing its asset purchases by 120 billion euros through to the end of 2020. Overall, the risk-off tone and increase in market.
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