Global equities fell 1.1% in US dollar terms and 0.6% in sterling terms over the course of January. The decline was led by emerging markets, which dropped 4.7% over the month, followed by the UK, which declined over 3%. Flat performance from the US market was enough to see it take the lead among the major regions. Utilities was the best performing sector, up almost 6%, followed by technology stocks, while the energy sector saw a 9% fall as the price of oil dropped sharply.

Major sovereign debt yields fell over the month, reflecting strong performance from government bonds. Investment grade credit also performed relatively well; high yield debt could only manage flat returns due to substantial credit spread widening. The Japanese yen and US dollar were the best performing major currencies as various emerging market currencies weakened sharply.

The early part of the month was focused on signs of improving economic data and the move to sign a US-China ‘Phase One’ trade deal. Economic surveys continued to point to a bottoming in the negative economic momentum that has weighed on growth expectations for some time. There are ongoing tentative signs of a pick-up in the manufacturing sector from depressed levels. However, the recovery remains fragile.

Improving economic indications were challenged towards the end of January as a viral outbreak took hold in Hubei province, China. The Wuhan Novel Coronavirus spread rapidly, although travel restrictions appeared to limit the number of cases outside of China. If local quarantine controls are not lifted early in February, the effect on the Chinese economy could be far more significant as industries will have to remain closed beyond the (extended) seasonal holiday shutdown period.

The month finished with the UK leaving the European Union, as scheduled, with both sides passing the previously agreed Withdrawal Agreement. The British government continued its combative rhetoric in relation to the future relationship between the two trading partners. The short timetable being set out for a 2020 year-end implementation of any new agreement is likely to require a rapid convergence on the various issues to allow any deal to be passed in time.

Performance and activity

Over January the fund’s Net Asset Value (NAV) rose 0.3%, the share price rose 14.2% as the Company announced its intention to return capital to investors.  The Company’s Association of Investment Companies (AIC) Flexible Investment peer group returned 0.4% in share price terms (source: Morningstar). The FTSE World Total Return Index, which the Company aims to outperform over the long-term, returned -0.4% in sterling terms.  The Company’s NAV is up 0.3% for the year at end January 2020.

The best performing sector during the period was the hedge fund sector.  The BlackRock European Hedge Fund performed particularly well as its investment style continued to perform strongly.  The position added 0.4% to performance.  The Sagil Latin American Hedge Fund also added 0.2%.  The commodities sector also generated strong returns as the BofA Merrill Lynch Commodity strategy rose 5.5% in sterling terms.

The biggest detractor in the month was the public equity sector that detracted 0.5%.  The largest detractor was New Energy Solar Ltd that sold off with no obvious cause.


Sovereign bond yield: the interest rate paid on a government (sovereign) bond. In other words, it is the rate of interest at which a national government can borrow.

Investment grade: refers to the quality of a company's credit

Net asset value (NAV): The total value of a fund's assets less its liabilities.