Performance as at 31 December 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 December 2020)
- Global bond markets had a mixed quarter as rising yields in the US – on the back of growing inflation expectations – saw a number of bonds deliver negative returns. Meanwhile in Europe, bond yields held towards record lows, which saw many European bonds deliver positive returns.
- Despite the rising government bond yields in the US, the Federal Reserve maintained its heavily accommodative rhetoric. At its November meeting, the Fed said economic activity remains “well below” pre-COVID levels and Chair Jerome Powell added that the central bank is strongly committed to using all its monetary policy tools through these challenging times.
- Over the quarter, the US 10-year government bond yield rose 23 basis points, hitting its highest level in more than six months.
- Meanwhile, in Europe, the European Central Bank expanded its Pandemic Emergency Purchase Programme by €500 billion, taking total purchases to €1.85 trillion. The increase came amid a severe second wave of COVID cases across the continent. The central bank said it wanted to extend favourable financing conditions, adding it was “supporting the flow of credit to all sectors of the economy”.
- By the end of the quarter, several government bond yields in Europe remained in negative territory.
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