Rising inflation expectations has seen traditional value stocks perform relatively well year to date, benefiting the Global Equity Income strategy.
Top performing stocks held during the month were BAT (+12.3%) US Bancorp (+11.5%) and AT&T (+8.5%). Worst performing stocks held during the month were Standard Life Aberdeen (-7.9%), Shell (-3.7%) and BP (-0.3%).
Economies look set to continue to recover from the pandemic. March saw the anticipated announcement of President Biden’s American Rescue Plan. At US$1.9 trillion the stimulus plan was larger than expected. US household savings are now around US$2 trillion above their pre-pandemic trend and credit metrics look good. This suggests that there may be a period of higher spending. Along with the higher than expected fiscal stimulus there have been notable upward revisions to GDP growth forecasts. Despite this improving outlook the Federal Open Market Committee (FOMC) have indicated that low interest rates will remain in place. The FOMC acknowledged that inflation is expected to temporarily overshoot their 2% target however, they anticipate that this will not trigger higher interest rates in the medium term. The condition of easy money supply therefore remains in place which, as we have said for some time, has been the primary force in propelling equity markets ever higher.
We remain focused on identifying quality companies offering superior sustainable dividend yields.
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