Lowes MPS - Quarterly Reports

Although further interest rate hikes are still forecast from year end levels in the UK, Europe and US, the market began to price in the possibility of interest rate cuts in the US for the second half of 2023. This was on the basis of inflation falling from its peak and also the threat of recession. This was somewhat at odds with the US Federal Reserve however, who believe that there is little likelihood that cuts will be seen in 2023. Whilst interest rates in the US therefore are likely to peak in the first half of 2023, it remains to be seen therefore whether we will see a full ‘Fed pivot’.

Performance The portfolio strongly outperformed the sector average during the quarter, returning 5.82% compared to 3.05% for the IA Mixed Investment 20-60% Shares sector average. All funds within the portfolio produced a positive return for the period. In absolute terms, the strongest performing fund in the portfolio for the period was the CT Responsible UK Income fund. UK equity income funds enjoyed a strong performance in general. Investors can look to equity income, in particular dividend growth, as a partial hedge against inflation. Companies which are able to pay a dividend can also be defensive given the financial strength of the companies allowing them to pay dividends. Fixed income fund holdings within the fund were also strong performers within their sectors, in particular the Rathbone Ethical Bond fund in the Sterling Strategic Bond sector and Royal London Ethical Bond fund in the Sterling Strategic Bond sector, with both funds ranking 1st quartile. Both benefitted from the general fall in bond yields seen over the period. Source: FE Analytics, Bid-Bid, Total Return Portfolio Activity and Positioning There were no changes made to the portfolio during the quarter. As there were no changes made to the portfolio in the third quarter also, the portfolio will be rebalanced in the first quarter of 2023, returning the underlying funds to their original allocations. We continue to review the equity/fixed income balance in light of the higher yields now available from the latter. We also continue to review to see if a broader range of asset classes can be invested in within the portfolio whilst still meeting the ethical and socially responsible criteria. An allocation to a relatively new launched fund is being considered. Disclaimer The portfolio is managed on a discretionary basis therefore the investment manager may make changes to the investments held without notice. Investors are agreeing to the investment model as recommended by an Adviser and may not be investing into the specific assets included in this report. Past performance is not a guide to future performance. The value of investments and any income from them can fall as well as rise and are not guaranteed, so you may get back less than you invested. If you invest in currencies other than your own, fluctuations in currency value will mean that the value of your investment will move independently of the underlying asset. Consideration should be given to whether it is felt that the outcome of any risk assessment is accurate and advice should be sought for factors such as investment objectives, the investment term, attitude to risk, capacity for investment loss and the level of inflation. This illustrative document is intended for investors where advice has been given by Advisers. Models are prepared in accordance with the stated objective and not client circumstances. Information from given sources is taken to be reliable and accurate, which Lowes Investment Management Ltd cannot warrant for accuracy or completeness. Lowes Investment Management is authorised and regulated by the Financial Conduct Authority (192938).