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LCP Investment Summary - May 2017

Posted on 4 June, 2017 by Administrator

LCP Investment Summary - May 2017

Global equity markets fell -0.4% in € terms during May, with the weaker US$ against the € reducing investment returns from US$ assets.  

Eurozone equities rose 2.2%, with investors continuing to be reassured by strong company earnings and solid economic data. The election of Emmanuel Macron as the French president was also seen as a positive for markets.

North American equities rose 1.3% (in $ terms), with investors again reacting positively to both strong company earnings and economic data in the US. But political issues also loomed large, particularly the various investigations concerning the Trump administration and Russia. As a result, some investors were concerned that the proposed tax reforms & increased infrastructure spending may now get delayed.

Bonds

A slight steepening in the eurozone yield curve combined with a shift towards peripheral European bond markets lead to a fall in the Euro sovereign AAA 15+yr index by -0.6% and a rise in the Euro Broad sovereign 10+ yr index.

Eurozone inflation data was weaker that forecast, despite the improving economic growth data, which could delay any possible ECB action to start reversing its ultra-loose monetary policy. The Euro sovereign inflation linked bond fell by -0.6% in the month.

Sample DB Scheme

The funding level of our sample DB scheme fell to 98.1%, as its assets fell and its liabilities rose (calculated using a MFS proxy) over the month.

Sample DC Schemes

Our High Risk Strategy rose over the month, but the Medium Risk and Pension Purchase Strategies fell due to their higher allocation to longer-dated Eurozone government bonds.

Market Performance to 31st May 2017

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