The page you were trying to view is not available for your role and region.
Market Overview
Global equities posted pleasing returns in February, with the MSCI All Country World Index (ACWI) rising by 3.4% (all returns total and in sterling, unless otherwise stated). Japan, Asian and emerging markets helped lead the way, with political developments in the former pushing the market to a new high. Europe posted another month of gains, while the UK market also rose sharply, with Health Care, Utilities, Materials and Energy the strongest performers. The US market fell in local currency terms, although dollar strengthen ensured a positive return for a sterling investor, while China lagged as markets reacted to weaker earnings and soft economic data.
Following joint US–Israel military action in Iran on the final day of the month, we have seen oil and energy prices spike and equity markets experience volatility. As a result, the gains achieved in February have since largely retraced. Despite this, most major equity indices remain positive year‑to‑date with the equity market reaction so far relatively contained.
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.
Authors
Antony Webb
Head of MPS Investment Funds
