BY DAVID ARNAUD, SENIOR FUND MANAGER & KSHITIJ SINHA, FUND MANAGER
Europe continued to outperform in October, particularly in the periphery, as Italian and Spanish bonds performed strongly, despite the concerns surrounding Catalonia’s disputed independence referendum. The big driver of this outperformance was the European Central Bank (ECB) announcing that, from January 2018, it will continue to purchase €30 billion of corporate bonds a month until September next year. In addition, it will continue to reinvest the proceeds of maturing bonds.
The European economy also continued to exceed expectations, with Gross Domestic Product (GDP) growth remaining ahead of consensus and core inflation staying low. In addition, the US economy also continued to perform, with annualised GDP growth north of 3%, whilst the Manufacturer’s Purchasing Managers’ Index (PMI) hit a twelve year high.
This was a strong environment for the Fund as our interest rate, currency and credit positions all contributed to outperformance. For example, sterling weakened by 1% against the US dollar. This move benefited our US dollar-denominated overseas positions, for example, whilst our overweight in European corporate credit also contributed to performance.
Past performance is not a guide to future performance. The value of investments may fall as well as rise and investors may not get back the amount invested. Income from investments may fluctuate. Currency fluctuations can also affect performance.
The information contained in this document is provided for use by investment professionals and is not for onward distribution to, or to be relied upon by, retail investors. No guarantee, warranty or representation (express or implied) is given as to the document’s accuracy or completeness. The views expressed in this document are those of the fund manager at the time of publication and should not be taken as advice, a forecast or a recommendation to buy or sell securities. These views are subject to change at any time without notice. This document is issued for information only by Canada Life Investments. This document does not constitute a direct offer to anyone, or a solicitation by anyone, to subscribe for shares or buy units in fund(s). Subscription for shares and buying units in the fund(s) must only be made on the basis of the latest Prospectus and the Key Investor Information Document (KIID) available at www.canadalifeinvestments.com.
Canada Life Investments is the brand for investment management activities undertaken by Canada Life Asset Management Limited, Canada Life Limited and Canada Life European Real Estate Limited. Canada Life Asset Management Limited (no. 03846821), Canada Life Limited (no.00973271) and Canada Life European Real Estate Limited (no. 03846823) are all registered in England and the registered office for all three entities is Canada Life Place, Potters Bar, Hertfordshire EN6 5BA. Canada Life Asset Management is authorised and regulated by the Financial Conduct Authority. Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
CLI00999 Expiry on 15 February 2018