Fund Return 2022-2023
Fund return to 31 January 2023
Fund
|
Performance
|
|
1 month
|
Scheme Year to Date
|
1 Year
|
|
|
|
|
CERS Multi Asset
Fund
|
2.0%
|
-1.1%
|
-2.7%
|
CERS Bond Fund
|
3.6%
|
-12.0%
|
-28.8%
|
CERS Cash Fund
|
0.1%
|
0.0%
|
-0.4%
|
CERS Equity Fund
|
5.8%
|
-1.6%
|
-7.3%
|
CERS Property Fund
|
-5.9%
|
-3.2%
|
-2.5%
|
CERS Alternative
Asset Fund
|
0.5%
|
0.0%
|
4.0%
|
Investment Commentary
Provided by Mercer - CERS Investment Adviser
Market Developments
Equities
and other growth assets maintained the positive momentum from October. The main
driver of improved investor confidence in November was a better than expected
US inflation reading, which strengthened hopes that monetary tightening may
slow down later this year and into 2023.
The
overall economic outlook remained soft. Purchasing manager indices remain in
contraction territory, and layoffs are increasing. Some regions, such as the UK
and Europe, appear to be in a recession already. However, investors took this
as a sign that monetary policy tightening is now taking effect, which should
allow the Federal Reserve to slow down the pace of monetary tightening, with
better than expected inflation figures in the US strengthening this conviction.
This
continued to fuel the rally in equities that began in October. A weaker dollar
boosted returns for international equities further, which outperformed the US
on a local currency basis as well. Emerging market equities were driven by
their own dynamics, as rumors of an easing in COVID restrictions as well as the
announcement of meaningful support to the ailing property sector led to a
massive rally in Chinese equities. Uncertainty returned later in the month when
an increase in COVID restrictions led to unrest.
Fixed
income returns were positive. Lower real yields supported bond returns across
the board and falling credit spreads gave additional boosts to investment
grade, high yield credit and emerging market debt. Lower real yields also
allowed gold to make a comeback.
Commodities
had a strong month in spite of falling oil prices. Russia rejoined the deal
allowing the safe passage of grain from Ukraine, which among other factors led
to a decline in wheat prices.
There
were a number of political events over the month, some impacting markets more
than others. Changing perceptions on the future path of China’s COVID
restrictions led to some volatility.
Meanwhile, US midterm elections did not have a major market impact as a
split government was widely expected. Talks between President Biden and
President Xi were seen as an encouraging step towards preventing a further
deterioration in the relationship between the world’s two largest economies.
The
US dollar weakened substantially in November as risk on sentiment reduced
demand for safe haven assets. At the same time, an expected slowdown in the
pace of monetary tightening made US dollar less attractive relative to other
currencies.
Outlook
The
global economy is bending, but not breaking. A further slowdown in 2023 should
be anticipated, but we do not expect this to culminate in a deep global
recession. There is plenty of regional divergence, however, with some countries
potentially seeing worse economic performance than others.
Inflation
is peaking, but not disappearing. We expect annual inflation rates to fall in
2023 but remain firmly above the 2% targeted by developed central banks.
Central
banks can be expected to pause their tightening campaigns in early to mid-2023
to assess the impact of recent policy changes. Our base case sees rates staying
at high levels in most countries before eventually being cut. That said,
further inflation surprises may prompt additional and aggressive action that
would weigh on equity and fixed income returns.
Numerous
geopolitical worries are likely to remain, with the conflict in Eastern Europe,
China’s position on Taiwan and ongoing tension with Iran continuing to impact
economies and markets. There remains a large question mark over China due to
its continuing economic slowdown (driven by the government’s zero-Covid
policy), regulatory crackdowns, a collapsed property sector and President Xi's
tighter grip of political power following the recent National Party Congress.
Investors
have had very few places to hide as they adjust to a world of higher inflation
and tighter monetary policy. Corporate bonds now look attractively priced and
defaults and downgrades appear to be contained. Sovereign bonds offer better
value than before, as do equities, where reasonable valuations must be balanced
against optimistic earnings expectations and higher discount rates. The US
dollar is significantly overvalued and should weaken longer term, although the
near-term outlook remains unclear. Those investors with a longer investment
time horizon could look to other currencies such as the euro and the yen, due
to their cheap valuations.
Notes
Scheme Year to date performance is the period from 1 June 2022 to the most recent month shown.
- 1 Year performance is the cumulative performance of the last 12 months to the most recent month shown.
- Multi Asset Fund performance assumes no lifestyling.
- Performance shown is net of annual management charge.
- The investment choices offered by the Trustee will be regularly reviewed and may be varied from time to time.
Before you choose a fund we recommend that you speak to a financial adviser. The CERS Trustee preferred financial adviser is Milestone Advisory DAC. You can contact them or your own financial adviser to assist you to review your investment choices. You can contact Milestone Advisory DAC via the website (www.milestoneadvisory.ie), by post: Linden House, 4 Clonskeagh Square, Clonskeagh Road, Dublin 14, D14 FH90, by email (info@milestoneadvisory.ie), or by phone (01) 406 8020. Milestone Advisory DAC t/a Milestone Advisory is regulated by the Central Bank of Ireland.
If you require further information please contact the CERS Team at info@cers.ie