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Castle in Island

Ark Review of the Month

March 2023

Global Markets


In the first quarter of 2023, the global economy experienced positive growth. With the year to date composite Purchasing Managers' Index (PMI) for the US and Europe rebounded significantly, developed market stocks returned nearly 8% this quarter. The MSCI Europe ex-UK Index rose 10.5% in the first quarter, the US S&P 500 Index rose 7.5%, and the UK FTSE All Share Index rose 3.1%.

The fixed-income market also responded positively to the decline in inflation and the prospect of loose monetary policy. Government bond prices rebounded significantly, especially in March. US Treasury prices rose 3.0% in the first quarter, while UK Gilt prices rose 2.2%.

As of 31 Mar 2023:

UK 10 Year Gilt Yield 3.49%
US 10 Year Treasury Yield 3.47%
Germany 10 Year Bund Yield 2.29%

UK Market

On 22 March, the Office for National Statistics (ONS) announced that the CPI inflation reached 10.4% in the 12 months to February. The inflation in food and non-alcoholic beverages rose to 18.0%. The Bank of England’s Monetary Policy Committee voted on 22 March to raise the base rate by 0.25 percentage points to 4.25% at its meeting. It is expected that the UK's GDP will remain flat in the first quarter and grow slightly in the second quarter. As the government's energy price guarantee will continue for another three months from April, real household disposable income is expected to remain broadly stable in the short term.

Ark Insights

On 15 March, the Chancellor submitted the 2023 Spring Budget to Parliament, focusing on addressing the UK's productivity issues, increasing labour supply, promoting business investment, and boosting economic activity. Of note in the budget are changes to pension policies. The lifetime allowance will be abolished from April 2024 and there will be no additional tax charge for amounts exceeding the allowance from April 2023. The lifetime allowance refers to the total amount of tax-relieved contributions an individual can accumulate in their pension pot, which is currently set at £1,073,100 for the 2022-23 tax year. Additionally, the annual allowance for pension contributions will increase from the current £40,000 to £60,000 from April 2023. The annual allowance has remained at £40,000 since the 2014-15 tax year. These policy changes are expected to provide financial incentives for individuals with significant pension reserves to continue working and could lead to an increase in the employment of around 15,000 people.

As for asset allocation, despite the recent collapse of Silicon Valley Bank and Credit Suisse affecting confidence in banks or the financial system globally, the Financial Policy Committee of the Bank of England has recently assessed that the UK banking system maintains robust capital, strong liquidity positions and significant resilience, and is capable of continuing to support the economy in a variety of economic scenarios. Nonetheless, the financial sector will still face pressure from a slowdown in bank lending. The tightening of credit conditions is expected to have an impact on economic activity over time, therefore reducing inflationary pressures.

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.

Issued by Ark Investment Management Ltd which is authorised and regulated by the Financial Conduct Authority. 

© Ark Investment Management Ltd. Registered in England & Wales with the company number 09281759.

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