June 17th, 2024

June MPS Update

Market Summary

The global markets experienced a wave of optimism in May as data releases over the month eased worries of the US economy getting too hot and boosted investor confidence in the economic prospects of other regions, which helped risk assets perform well. Global equities were up over 2.5% over the month in sterling terms with global bonds also performing well, albeit with gains impacted by sterling strength. Markets continue to expect rate cuts this year, but with some differences in the timing between the US, UK and Europe.

US equities did well in May, particularly those in the tech sector. Market-leading AI chip designer, NVIDIA, continues to benefit from a surge in demand. Its shares surged by more than 9% immediately after an excellent first-quarter earnings report that showed a 262% revenue increase and a planned 10-for-1 stock split. This announcement highlighted NVIDIA’s robust financial health and its significant contribution to the earnings-per-share of US large caps. Elsewhere, in the UK, markets have rebounded well after a brief recession in the latter half of 2023. UK GDP grew 0.6% in the first quarter of 2024, with financial markets showing little volatility in the last month despite the announcement of an early general election scheduled for 4 July.

While the potential for profound change to the UK’s political leadership is very much on the table, there is equally the expectation that there will be little in the way of drastic fiscal policy changes, such is the lack of budgetary “wiggle room” for whichever party comes out on top.

Strategy Returns

The positive returns of the strategies were reduced by the pound’s rise against other currencies, which lowered the gains from developed markets for the higher risk strategies. The pound rose by nearly 2% against the US dollar. UK small and medium equities did well, with the UK small cap market up 6%, beating the broader domestic and international markets. This was mainly driven by the rising bid activity we mentioned last month.

At the lower end of the risk spectrum, gilts delivered a modest return, up just under 1% supported by a rally in longer-dated bonds given they are more sensitive to interest rate expectations. Year to date returns for the strategies continue to paint a positive picture across the board.


  • In the UK we sold our position in Haleon, which we’ve owned since 2022. This was driven by what we perceive to be a current ceiling for the share price caused by an overhang from their largest shareholders, GSK and Pfizer, incrementally selling their positions. We rotated the proceeds into Unilever and HSBC, both of which have shown recent positive trends.
  • Within our European allocation we made a new investment in AIB Group, a leading bank that mainly operates in Ireland and offers a wide range of services to retail and corporate customers. We think the bank is gaining from higher interest rates and has some pricing power as the market has become more concentrated following the withdrawal of competitors. We funded this by reducing our existing investments in European bank ING and Swiss pharmaceuticals giant Roche, both of which we still hold at significant weights.
  • In the US, we reduced our exposure to Salesforce, a leading enterprise software provider, and used the proceeds to increase our stake in Apple, which benefited us over the month. We also adjusted our allocations in the semiconductor space by reducing AMD and adding to NVIDIA before the latter’s earnings results exceeded expectations.

You can find out more about our MPS strategies, and how we executed them this May, on our YouTube channel.

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