Market Review
Higher-than-expected inflation meant index-linked government bonds outperformed their conventional counterparts. Accordingly, the real Gilt yield (ie the yield adjusted for inflation) fell in March.
Fund Performance
The Fund was ahead of its benchmark in March (based at close of business day). The Fund gained mostly due to our yield curve position and allocation to corporate bonds during the period. The Fund lost some of these gains due to our exposure in securities such as Road Management Services.
Fund Positioning
The Fund moved overweight in medium-dated (20-year) bonds. We purchased Canadian and Swedish inflation-linked bonds, and halved our position in index-linked Japanese government bonds.
Graeme Caughey
31 March 2012