Strategy Performance
February saw broad‑based gains across equity markets, particularly those away from the US. However, returns were also positive for the strategies’ fixed interest and alternative investment exposure. Gilts performed strongly versus peers, rising approximately 2.5%. Sterling investment grade credit was up approximately 1.2%, with a positive contribution also seen from the hedge fund allocation. This resulted in low single digit returns across the strategies.
Activity
Our Asset Allocation Committee has met several times in recent weeks and agreed to maintain a constructive position on equity markets, reflecting our focus on medium‑term global profit growth rather than short‑term geopolitical risk. Within the “Building Block” funds, during February we selectively added exposure to companies aligned with long‑term structural growth trends such as AI infrastructure investment, rising energy demand, and increased European infrastructure and defence spending. Recent additions include ArcelorMittal, the European steel producer and Engie, the French utilities company. We also increased existing holdings such as Standard Chartered within the UK Financials allocation and Glencore within Materials. In contrast, we reduced the holding in food ingredients products business Kerry Group, exited Bytes Technology on the grounds of reduced conviction, and trimmed companies facing potential disruption from AI, including RELX and LSEG, to manage risk.
Outlook
Events in the Middle East and the oil price will remain the main drivers for financial markets in the near term, but investors should not lose sight of their long-term positioning. While the situation is complex and seems unlikely to be resolved as swiftly as previous Trump-led market fallouts, things can snap back quickly on positive news.
We continue to monitor developments closely, watching for the potential release of strategic oil reserves, further disruption to energy infrastructure or transportation and any other pertinent events. To date, we have not made any knee-jerk, emotional changes to positioning. Rather, our focus remains on structural global earnings drivers and, as sentiment stabilises, we expect portfolios to resume the positive trajectory seen at the start of the year.
