The UK vaccine rollout continues unabated with new COVID cases currently the lowest since early last fall and it is expected that phase two will be completed by the end of July with all adults offered the vaccination. As far as the economy is concerned, when the COVID-related restrictions were near their most stringent month-on-month GDP fell 2.9% in January, much less than the expected decline of almost 5%. Further data released this month showed that the UK consumer continued to face significant headwinds amid elevated COVID cases and government restrictions. Retail sales declined by 8.2% in January and the contraction was even higher at 8.8% when gasoline sales were excluded.

The yields on US 10-year treasuries have increased sharply since the beginning of February, peaking at 1.74% in the middle of March before declining to its current level of 1.6%. This selloff in the US bond market prompted by renewed inflationary fears flowed through to the UK and elsewhere, affecting the high PE and growth sectors of the equities markets while cyclicals remained in favour.   The result was that while the S&P 500 was up by 2.6%, the tech heavy NASDAQ was only up 0.9%.  The MSCI increased by 3.7% during the month, driven up by other markets including France where the CAC was up by 5.9% and Germany where the DAX up by 2.6%

Our portfolio performed well during the month, increasing by 3.36% in spite of the continued weakness in global growth stocks caused by the rise in long-term bond yields.  This compares with an increase of 4.67% in the Small Cap Index, a 1.23% increase in the AIM All Share Index, a 3.55% increase in the FTSE100 Index and a 2.91% increase in the FTSE 250 Index. After allowing for expenses, the NAV increased by 3.08% and after providing for the payment of a 7.7p dividend the NAV was up by 0.04%.

During the month we top sliced our position in National Grid, using cash from the sale as well as some of our excess cash to increase our exposure to Adcam, Clinigen and Rightmove.  In addition, we took up our rights in LXI REIT and declared a 7.7p dividend which resulted in our overall cash position declining from 7.8% of the portfolio at the end of February to 2.1% at the end of March.