September has seen more activity in the markets as the tech stocks surge appeared to run out of steam and a resurgence of COVID-19 across the UK and Europe (along with Brexit) brought renewed uncertainty.

This table shows a summary of the broad asset allocation of the Fund since the beginning of the pandemic. The summer months have not seen as much of a shift in the overall allocation as in the previous quarter but the trends remain the same - reducing the cash and near-cash exposure in favour of modest further increases in the allocation to the higher risk asset classes (see table, right).

AAA floating rate note exposure was reduced by the sale of one of the Royal Bank of Canada issues and will be reduced further over the next few days as Nationwide have tendered for a number of issues that we were happy to offer. We were quiet in the credit markets simply switching between two issues from Credit Suisse for an improvement in return.

Prices for infrastructure assets have been drifting recently, we added to our exposure to International Public Partnerships, we have also been able to add modestly to our zero dividend preference exposure. In the equity markets we are finding some areas that are notably ‘unloved’ at present and we have added to UK smaller companies and some, London listed, international exposure.

Clearly, the UK and European economic recoveries are at a delicate point, while the US is facing an acrimonious (and probably litigious) Presidential Election. The resurgence of COVID-19 in France, Spain and the UK is giving consumers a reason to back-off their spending, though the industrial recovery appears to be on track. We hope that the clamp-down measures are not so harsh as to choke off the recovery, and the UK does need a sensible deal with the EU. Meanwhile, real progress is being with vaccines, something that appears to be being overlooked at present.