Ark Review of the Month
In April, global equities continued their downward trend from the first quarter. Of the major developed market indices, the US S&P 500 Index fell by 8.7% and the MSCI Europe ex UK Index fell by 1.1%. Commodity prices continued to rise by 4.1% resulting in the relatively commodity heavy UK FTSE All-Share Index recovering slightly, rising by 0.3%.
In the fixed income market, the US 10-year Treasury yield was approaching 3% by the end of April, with prices down 3.1% over the past month. UK Gilt prices fell by 3.0%, while German Bund prices fell by 3.1%. Global sovereign bond prices fell by 5.7% overall. Global investment-grade corporate bond prices decreased by 6.1%.
Government bonds yield as of 29 April:
UK Gilt 10 Year @1.91%
US Treasury 10 Year @2.93%
German Bund 10 Year @0.95%
Inflation in the UK reached 7.0% in March, which is its highest rate since 1992. On 1 April, the UK Energy Regulator Ofgem announced a 54% increase in the price cap for gas and electricity. Research released by JLL suggests that households with an EPC A-C rating will see their energy bills increase by around £600 per year, while those with the lowest energy efficiency rating of G could see their bills increase by over £1,700 per year. Fuel prices have also risen by 22.4% in the last 12 months, resulting in more buyers opting to buy electric cars.
The increase in living costs has squeezed household spending budgets, causing total retail sales in the UK to fall by 1.4% in March. Data released by market research company GfK showed that consumer confidence in the UK has now fallen to its lowest level since the financial crisis in July 2008 at -38. The index measures people's attitudes towards the overall economy and their personal finances.
The World Food Programme recently released its Global Report on Food Crisis which suggests 193 million people from 53 countries experienced food crisis or worse over 2021. Factors causing this situation include persistent regional conflict, extreme weather and economic shocks. It is foreseeable that the numbers will continue to worsen in 2022. With nearly 10 billion people on the planet by 2050, the gap between food production capacity and the amount of food required will even widen.
According to the Intergovernmental Panel on Climate Change, agriculture and forestry already account for a quarter of global greenhouse gas emissions. Expanding food production massively at all costs seems incompatible with our climate action. Global food producers and retailers need to explore more sustainable food production and distribution solutions with the help of technology and innovation. We believe that more investment opportunities will emerge on the way, including precision agriculture, fertiliser innovation, natural and chemical preservative development and plant-based food technology.
As always, our Investor Relations team would be more than happy to help you with any queries.
The views expressed in this update are not intended as an offer or solicitation for the purchase or sale of any investment or financial instrument. The views reflect the views of Ark Investment Management at the date of this document and, whilst the opinions stated are honestly held, they are not guaranteed and should not be relied upon and may be subject to change without notice. Investments entail risks. Past performance is not necessarily a guide to future performance. There is no guarantee that you will recover the amount of your original investment. The information contained in this update does not constitute investment advice and should not be used as the basis of any investment decision. Any references to specific securities or indices are included for the purposes of illustration only and should not be construed as a recommendation to either buy or sell these securities or invest in a particular sector. If you are in any doubt, please speak to us or your financial adviser as appropriate.
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