The UK equity market performed well in March with a total return of 4.0% as measured by the FTSE All Share Index. The FTSE 100 Index of the largest companies slightly outperformed with a total return of 4.2% compared with 3.0% for the FTSE 250 Index of medium-sized companies.

In general, large, defensive stocks did better over the month and tobacco was the best performing sector. City of London benefited through its stakes in British American Tobacco and Imperial Brands. On the other hand, cyclical sectors, such as mining, underperformed. City of London’s holdings in Rio Tinto and BHP gave back some of their gains of recent months.

Additions were made to City of London’s holdings in life insurers Legal & General and Phoenix, which reported satisfactory profits and dividends for 2020 and should benefit from the recent rise in bond yields.  After the strong recovery in its share price, the holding in ITV was sold given competition for television from new services.

As the UK and other economies emerge from lockdown and relatively normal economic and social life resumes, there is likely to be strong growth in consumer spending. A significant uncertainty remains for the future path of Covid-19 with threats from new variants of the virus. Overall, the dividend yield from UK equities remains attractive relative to the main alternatives.



Bond yield: The level of income on a security, typically expressed as a percentage rate. Note, lower bond yields mean higher prices and vice versa.

Cyclical stocks - Companies that sell discretionary consumer items, such as cars, or industries highly sensitive to changes in the economy, such as miners. The prices of equities and bonds issued by cyclical companies tend to be strongly affected by ups and downs in the overall economy, when compared to non-cyclical companies.



References made to individual securities should not constitute or form part of any offer or solicitation to issue, sell, subscribe or purchase the security. Janus Henderson Investors, one of its affiliated advisors, or its employees, may have a position mentioned in the securities mentioned in the report.