Fund Review
The fund produced a return of -4.3% for the quarter ended 31 March 2018, outperforming its benchmark by 0.6%. The underlying dollar fund had a return of +0.1% in the first quarter ahead of its benchmark returns. The dollar fund continues to outperform its benchmark over all rolling periods.

The fund benefited from being overweight equities (+3%) and underweight Property (-0.3%). Share selection again drove returns, led by picks in Consumer Staples, Financials and Information Technology. Information Technology, now the highest weighted sector in the fund at 25.6% (up from 21%) and overweight the benchmark’s 18.9% had the best return in the quarter of +4.4%. Consumer discretionary sector returned +1.2% in the quarter.

The other two asset classes produced positive dollar returns as well during the quarter, with Fixed Interest doing +0.4% and Cash doing +3.1%. The allocation to Fixed Interest was increased to 17.4% from 15.6% (benchmark 20%) funded by cash.

Looking Ahead
Bond markets remain supported by accommodative monetary policy, including outright quantitative easing in the Eurozone, and demand for income will remain a positive force. Columbia Threadneedle, the fund manager, expects their reflationary economic outlook, together with good earnings forecasts to bode well for risk assets. They still regard equities as a more attractive proposition than bonds, offering better value relative to their longer-term history.