Fund Return 2023-2024
Fund return to 31 October 2023
Fund
|
Performance
|
|
1 month
|
Scheme Year to Date
|
1 Year
|
|
|
|
|
CERS Multi Asset
Fund
|
-1.8%
|
-1.3%
|
0.8%
|
CERS Bond Fund
|
-0.7%
|
-7.6%
|
-6.3%
|
CERS Cash Fund
|
0.3%
|
1.2%
|
2.1%
|
CERS Equity Fund
|
-3.0%
|
-0.8%
|
4.4%
|
CERS Property Fund
|
-2.3%
|
-4.7%
|
-11.2
%
|
CERS Alternative
Asset Fund
|
0.0%
|
-0.2%
|
1.1%
|
Returns to 31.05.2023
Please click here to see a graphical illustration of funds to 31.05.2023
Investment Commentary
Provided by Mercer - CERS Investment Adviser
Market Developments
In August, equities weakened after a strong run over
the past few months. The US outperformed most major developed and emerging
market countries, while growth generally outperformed value. Fixed income
performance was flat to negative.
Negative equity performance appears to have been
driven by an absence of positive news and markets being technically overbought
after a few months of strong gains. Comments by Federal Reserve Chairman Powell
stating that inflation remains uncomfortably high and the Fed is prepared to
raise rates further if needed also contributed to the negative sentiment. Some
negative headlines such as the Fitch downgrade of US government debt and
Moody’s downgrading US regional banks did not lead to major market reactions.
Telecommunications and energy were the only sectors with positive returns
during the month.
Forward-looking composite purchasing manager indices
(PMI) continued to fall. In the US, the composite PMI fell to a six-month low.
Overseas, composite PMIs also declined for the UK, Eurozone and Australia.
Japan was one of the only regions to see an increase in their PMI. Consumer
confidence continues to weaken with growing signs of consumer distress, such as
rising credit card and auto-loan delinquencies. Labor markets appear to be
cooling off, but generally remain strong. Overall, this paints a picture of a
slowing economy with some regions weaker than others, particularly China, UK,
and Eurozone.
Headline inflation ticked up slightly in the US and
dropped sharply in the UK and Eurozone, largely driven by base effects.
Inflation remained unchanged in Japan and turned negative in China. Core
inflation generally continued to soften for most regions. At the annual summit
in Jackson Hole, central bankers expressed cautious optimism, while
acknowledging that inflation remains elevated. Federal Reserve Chairman Powell
suggested that the Fed intends to hold rates steady, but it is prepared to
raise rates further if necessary. The Bank of England raised the bank rate for
the 14th consecutive month to 5.25%, while China’s Central Bank introduced some
easing measures.
In terms of geopolitics, talks over alternative export
routes for Ukrainian grain made progress amid the ongoing conflict. At the
BRICS Summit, invitations were extended to six nations to join the block. US
dollar strengthened against all major currencies, most notably against the
Australian dollar, South African rand and Japanese yen. Oil prices rose during
the month and reached their highest levels for 2023. Wheat prices dropped
sharply over the month as Russia increased its shipments after a better-than-expected
harvest which offset the negative impact of renewed uncertainty over Ukrainian
supplies. Global REITs declined during the month, modestly underperforming
broader equity markets.
Outlook
Central banks in most parts of the world — with the
notable exceptions of China and Japan — have been tightening monetary policy
(using both higher interest rates and quantitative tightening) in an attempt to
slow economic growth, ease wage growth and reduce inflation. However, the
slowdown has only been modest thus far, with unemployment levels at their
lowest in decades
The global economy’s resilience can be attributed to
three main factors: a growth boost from China’s reopening, broad strength in
consumer balance sheets and an assist from lower energy prices. We expect some
of these supporting factors to fade, with a more difficult 12 months ahead for
the US, even if China remains strong. However, we don’t expect uniformity
across regions as different economies are at varying stages of the business
cycle.
When asked what keeps us
awake at night, we would note the risks below.
Contagion from the US regional banking crisis
US regional bank distress still has the potential to
spill over into larger banks and to banks outside the US, causing a broader
credit crunch. However, we believe this scenario is unlikely due to the
significantly improved capitalization of banks, robust bank profitability and
the determination of policymakers to ensure the stability of the financial
system, which is closely aligned with a stable banking sector.
Persistent inflation
Although we expect headline inflation to decrease
significantly in the near term, it’s less clear if and when core inflation will
fall sustainably to central banks’ 2% targets. A delay could force central
banks to keep interest rates high for some time or even raise them again after
a pause.
Geopolitics
A further deterioration in US–China relations may lead
to additional trade restrictions and potential military confrontations, both
direct and indirect, between the two global superpowers. A further escalation
of the ongoing war in Ukraine remains a risk, with far-reaching impact
politically, economically and, more importantly, in terms of the human cost.
Notes
Scheme Year to date performance is the period from 1 June 2023 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