Fund Return 2022-2023
Fund return to 28 February 2023
Fund
|
Performance
|
|
1 month
|
Scheme Year to Date
|
1 Year
|
|
|
|
|
CERS Multi Asset
Fund
|
-0.8%
|
-1.9%
|
-2.0%
|
CERS Bond Fund
|
-4.6%
|
-16.0%
|
-29.1%
|
CERS Cash Fund
|
0.1%
|
0.1%
|
-0.2%
|
CERS Equity Fund
|
-1.5%
|
-3.0%
|
-6.0%
|
CERS Property Fund
|
0.0%
|
-3.2%
|
-3.1%
|
CERS Alternative
Asset Fund
|
-0.2%
|
-0.2%
|
4.1%
|
Investment Commentary
Provided by Mercer - CERS Investment Adviser
Market Developments
Both
risk and duration assets sold off in February as pessimism over the monetary
policy outlook took hold.
The
US economy is showing few signs of a material slowdown in spite of almost a
year of monetary tightening. Even though more large companies announced layoffs
in February, the labor market as a whole remains exceptionally strong, attested
by another strong nonfarm payroll report that saw the unemployment rate plummet
to the lowest level in more than half a century. Consumer confidence
strengthened to the highest level in over a year, retail spending came in much
stronger than expected and one of the forward-looking purchasing manager
composite indices returned into expansionary territory. Outside the US,
economic data also indicated stronger growth momentum.
Consumer
inflation continued to come down from high levels in the US, UK and Eurozone,
although increased in Japan and China.
US producer inflation, however, came in stronger than expected. The
combination of a resilient economy and mixed signals on inflation turned
sentiment for the worse. Markets once again priced in the possibility of more
inflationary growth momentum that could force central banks to continue with
monetary tightening.
Equity
returns were negative in February for most countries and sectors. The 2022Q4
earnings season continues to be disappointing. Earnings appear set to decrease
for the first time since mid-20201.
Earnings aside, increased concerns over more monetary tightening than
was priced in at the beginning of 2023 added to negative sentiment.
10-year
yields in developed countries rose by 25-50 basis points over the month as markets
priced more monetary tightening, which led to negative returns for fixed
income. Rising credit spreads were an additional headwind for investment grade
bonds during the month, while high yield spreads declined slightly. Inflation
expectations in the US, as measured by the 10-year break-even rate, rose to
2.4% amid doubts whether downward momentum would continue.
The
US dollar had its first positive month since September of 2022. This was driven by both safe haven demand in
a risk-off month and expectations of an extension of the US monetary tightening
cycle.
Commodities
had a weak month even as economic indicators painted a picture of resilience.
The focus was once again on monetary tightening ultimately forcing a more
material slowdown further down the road. Rising real yields and a strong dollar
led to a sell-off in gold.
Outlook
After
the 2021-2022 inflation shock, we enter 2023 with signs that cyclical inflation
is easing, especially in the US. We anticipate inflation stabilizing near
central bank target levels over the next one to three years, but recognize
there are risks to this outcome.
Higher
inflation and greater inflation volatility, for example, remain long-term risks
driven by structural factors, including globalization slowing as the world is
factionalizing, inadequate investment in the commodities supply chain and
potential public debt monetization.
As a
result, portfolios should remain positioned to weather various economic and
inflationary scenarios by including a diversified mix of inflation-sensitive
asset classes, while being conscious of current valuations.
Investors
should evaluate the assets currently held in their portfolios and add exposure,
at the right price, to those missing. The good news is that market dislocations
have led to more attractive entry opportunities for many asset classes.
Furthermore,
investors whose governance structures allow them to react opportunistically may
find opportunities to make their portfolios more robust against the risk that
inflation pressures do not settle down as the market expects.
To
that end, asset classes with inflation-sensitive cash-flows such as listed or
unlisted real assets, natural resource equities and inflation linked bonds
could play an important role in building more robust portfolios.
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