During March, our net asset value return was -4.9% and shareholder returns were -6.7% in comparison to the FTSE All World return of -5.5%.

Global equities sold off sharply in March following the outbreak of hostilities in the Middle East and the resulting spike in oil prices. After the US and Israel launched combat operations against Iran, the latter retaliated with strikes across the Middle East that damaged key energy infrastructure and effectively closed the Strait of Hormuz, a key shipping lane for oil exports. Higher oil and gas prices triggered fears about stagflation (rising inflation and lower economic growth) in major economies. This increased risk aversion globally while also pushing bond yields higher, due to expectations of more hawkish monetary policies, which further weighed on equity markets.

US equities (-3.1%) declined, albeit more modestly than the broader market, helped by its status as a net oil exporter. Other oil exporters like Norway (11.7%) and Brazil (0.2%) gained as markets reacted to the looming oil crisis. The decline in UK equities (-6.1%) was more pronounced, with potential weakness in its domestic economy. Other regions were also impacted from the disruption and uncertainty. Europe ex UK (-8.7%) declined, in part driven by the regions’ exposure to rising natural gas prices. Japanese equities (-10.5%) gave back part of their gains from the start of 2026 amidst the wider risk-off sentiment. The MSCI Emerging Markets Index (-11.4%) reversed its early 2026 outperformance as a stronger US dollar formed a headwind. Within Emerging Markets, Asian economies exposed to restricted oil supplies out of the Middle East were impacted, with Korea (-23.7%) especially hard hit.

Government bond yields rose as the spike in oil prices drove inflation higher and reversed expectations of central bank interest rate cuts. The Federal Reserve held rates steady in March. Although this was widely anticipated, the central bank revised its inflation and economic growth projections higher, and markets pushed back expectations for the next rate cut while also contemplating the possibility of a rate hike in 2026. Both the Bank of England and European Central Bank left interest rates unchanged, but comments by policymakers at each bank increased expectations that their next moves could be to raise interest rates should inflationary pressures persist.

The overweight position in Marathon Petroleum (25.6%), a US oil refining, marketing, and transportation group, was a top contributor to excess returns. The overweight position in Safran (-18.2%), the world’s second-largest aircraft equipment manufacturer, detracted from performance. Shares in Safran came under pressure as its key airline customers faced multiple challenges from higher fuel prices, disruption to international flight paths and falling demand for travel due to economic and political uncertainty.

We ended the month at a discount of 9.5%, widening from 7.8% in February. Net gearing continued to be conservative at 4.0% (with debt at fair value) for month-end. We took the opportunity to add to our emerging market and US equity exposure into weakness over the month.

As at 31 March 2026