Fund manager commentary

Almost all equity markets across the globe continued to give up ground during the month. While the cause of the scare last month was slightly higher-than-anticipated wage growth and inflation data in the US, both of these factors subsided in March. At the same time, most measures of growth and activity in the US and Europe continued to be robust, with positive indicators for the balance of the year. The new Governor of the Federal Reserve took the opportunity to continue the policy of ‘normalising’ interest rates with a

well-flagged further increase of 0.5%. However, investors were unsettled by the imposition of a series of tariffs by the US on Chinese steel products. Latterly, the Chinese responded with a number of tariff increases on various US products. The concern is what this could mean for world trade, should this escalate. Markets fear uncertainty and moved lower; the prolonged period of very low levels of volatility and calm markets appears to be over. Against this background, the FTSE All Share Index fell by 1.8%, while that of the FTSE Equity Investment Instruments Index was down by 2.3% (all figures are total return).

The net asset value of the portfolio was 2.6% lower (also in total returns). The leading contributor was Woodford Patient Capital, which rose 7%. After a lengthy period of underperformance, two of the portfolio’s larger holdings experienced positive developments. Prothena, a US biotechnology company, struck a deal with biotech major Celgene for new equity at a higher level than the prevailing share price. The unquoted Autolus, also a biotechnology company, announced plans to list on NASDAQ Stock Market later in 2018.

As at 31 March 2018