Our portfolio declined by 1.38% over the month which was in line with the overall decline in the UK market. After providing for the expenses the NAV declined by 1.48% as compared to the FTSE 100 which was up by 0.38% and the broader FTSE 250 Index which declined by 2.13%. The AIM All Share Index declined by 1.93%, the Small Cap Index performed slightly better declining by only 1.54% while the Fledgling Index was up by 0.71%.  As mentioned in previous monthly comments, the FTSE 100 Index contains many larger, older and more traditional commodity and energy-related stocks including BP and Royal Dutch Shell which have been benefiting from soaring global oil and metal prices as a result of the war in Ukraine.

By comparison, the Global markets were under huge pressure with the MSCI declining by 8.43% over the month, mirroring the 8.8% decline in the S&P500 index. This decline in the broad global index was largely driven by a massive decline in the Mega Cap companies in the US with the tech heavy NASDAQ down by a massive 13.26% during the month.

Recent UK economic data for February reflected the global trend of higher inflation and slowing growth. GDP grew by 0.1% month-on-month, following a 0.8% gain in January which reflected weakness in industrial and manufacturing production as well as in construction and services. The UK’s March CPI headline rate was up by 7% and now sits at a 30-year-high which is the primary cause of the current tightening by the Bank of England with its policy rate now at 0.5%.  

The contraction in the US GDP at an annualised rate of 1.4% in the first quarter was a surprise and due to a substantial decline in net exports and inventories. However, personal consumption expenditure and fixed investment remained positive contributors. In the business sector, equipment investment increased by an annualised 15.3% against the backdrop of limited labour availability and strong wage growth as businesses continue to invest in automation to overcome the labour shortage and rising labour costs.

During the month we sold our holding in Lok ‘n Store and added further to our holding in Target Healthcare, Tritax Big Box, LXI Reit and AEW UK Reit, thereby increasing the yield from our property exposure.  We received the cash from the takeover of Clinigen with cash currently comprising 10.5% of the portfolio at month end.