However, it was an interesting month as the worst of the inflation fears appeared to be confirmed and US consumer prices jumped for the second month in a row to reach 5%, a level not seen since mid-2008 during the financial crisis. Then the Federal Reserve delivered a hawkish surprise, signalling earlier tapering and rate hikes as data continues to point to a strong global recovery.

Despite the lower volatility for the market as a whole, inflation and the Fed did trigger some surprising sector volatility. A number of the banks and financials fell sharply (an odd response from the banks to the prospect of higher rates), while tech stocks rose along with many of the media and consumer discretionary stocks. The US dollar was a beneficiary of the Fed’s revised tone with the DXY (US dollar Index) up around 2.5%, and by 2% v. sterling.

We have not made any changes to the Fund’s portfolio this month but, as ever, there have been some notable moves to report. Novozymes moved further ahead to make new highs, but the miners and industrials were dull with Rio Tinto, Nordson and Paccar all slipping back. The staple goods companies did well with 5% plus performance from Heineken, L’Oréal and Nestlé. The Swiss stocks in the portfolio were a notable contributor this month, led by a 9% gain for Roche Holding. The pharmaceutical holdings generally benefitted the portfolio, Illumina and Lonza Group being notable with Johnson & Johnson the only detractor.

The consumer discretionary holdings featured another strong performance from Hermès International, the quality/rarity value of this company (and its products) has pushed their share price to a rich valuation now, more rational appeared to be the 8% gain for Amazon.com this period, their stock price had been marking time all year. The tech holdings generally benefitted the portfolio, notably Intuit, though Oracle slipped after dull Q4 results that failed to meet expectations for growth in their cloud business. Financial stocks were the greatest detractor to performance with Morgan Stanley, Berkshire Hathaway and Everest RE all down by 5% or more, balanced somewhat by good performance from Euronext, settling down after their rights.