Market Review
Ten-year government debt in "core" markets traded in a narrow range in the three months to 31 March. While prices benefited from a flight to safety, this was countered by an upsurge in optimism over economic prospects. Meanwhile, the European Central Bank's long-term refinancing operation boosted Spanish and Italian government debt.
Fund Performance
Our short duration in US dollar bonds added to performance over the quarter with our underweight position in Italian bonds also benefiting the Fund. This was somewhat offset by negative contributions from our duration positioning in Euro bonds.
Fund Positioning
The Fund was positioned with a generally short duration in the US and core Europe, short duration in Italian government bonds for much of the period, and short duration in Japan during March. In terms of currency we were overweight the Swedish krona, a higher beta currency, and underweight the euro and Japanese yen.
Guy Skinner
31 March 2012