Original thinking | 5 May 2025

Monthly news and views covering April

Chris Robinson &

Ian Rees

Monthly market news and views from the Managed Portfolio Service team.

For information purposes only. Any views and opinions expressed here are those of the author at the time of writing and can change; they may not represent the views of Premier Miton and should not be taken as statements of fact, nor should they be relied upon for making investment decisions.

Investing involves risk. The value of an investment can go down as well as up which means that you could get back less than you originally invested when you come to sell your investment. The value of your investment might not keep up with any rise in the cost of living.

Premier Miton is unable to provide investment, tax or financial planning advice. We recommend that you discuss any investment decisions with a financial adviser.

For further information on the risks of investment and glossary terms please refer to the end of the document.

In brief

The US’ ‘Liberation Day’ created a more widespread shock than investors hoped for.
UK data remains a bright spot with interest rate cuts forecast.
Gold performed well but its surge higher lost some momentum.

The month of April

It is fair to say that the month of April felt like a rollercoaster. Equity markets, where shares of companies are traded, ended close to where they started, having been initially spooked by President Donald Trump’s trade war. The blanket introduction of tariffs on all US imports and the retaliatory tariffs that were then announced by countries, particularly China, in response, caused volatility. A turbulent few days tested the credibility of the US administration due to a fall in the value of US Dollar against other currencies and investors selling investments in US government debt (Treasury bonds). It was then announced that the implementation of most tariffs would be suspended for 90 days to allow for negotiation. This encouraged a temporary respite from the boarder sell-off and we saw a relief rally in financial markets.

The two big winners were the FTSE 250 Index, the stock market index consisting of medium-sized UK companies, and shares in the FTSE Europe Small Cap excluding the UK Index, which tracks smaller companies listed in Europe. They finished the month up 2.7% and 3.1% respectively in Sterling terms. UK performance was supported by the UK earnings season, with many companies announcing better than expected financial results. The announcement in February of increased government spending in Germany and the prospect of a lower European interest rate both helped in Europe.

It was the US where things were less positive, as the S&P 500 Index, the stock market index consisting of the US’ 500 biggest publicly traded companies, ended the month down -4.0% in Sterling. Although most of this move was due to the fall of the US Dollar against other currencies.

Elsewhere, commodity markets – where raw or primary products such as oil are traded – weakened. The price of Brent Crude, sourced from the Brent oil field in the North Sea and often considered a benchmark for global prices, fell -17.3%. While this dampens inflation pressure and could improve the probability of interest rate cuts in the US, it reflects fears over slowing global growth.

In the bond markets, the volatility focused around US government bonds and we initially saw yields fall sharply before rebounding. The UK 10-year Government Bond, which is the most closely followed UK government bond and has a maturity of 10 years (i.e. that is how long before investors are given back the original loan), was less affected. We saw the yield (or return) fall from 4.7% at the start of the month to close at 4.4%.

Aside from the tariff pain and confusion from ‘Liberation Day’, there were also concerns over the independence of the US Federal Reserve, which is the central bank which sets US monetary policy.

Since even before Trump was elected, there was a worry that he might remove Jerome Powell, the chair of the interest rate setting committee, which could create a further challenge to the economic credibility of the Trump administration. To instil some calm, President Trump said that he would not interfere with monetary policy. This announcement, alongside the pause on tariffs, provided further stability in a volatile period.

The tariffs story is far from over. The end of the 90-day suspension happens to coincide with Independence Day on 4 July. We will be watching out for a drip feed of news of US trading agreements and have noted suggestions that Trump will move away from the country-focused tariffs to sector specific ones. It is expected that a lower level of tariffs could be here to stay in the US, whilst other countries will have to lower tariffs for imported US goods.

The combination of financial market volatility and uncertainty pushed gold prices to record highs during the month and provided a haven from uncertainty over US financial policy, worries of inflation and slowing economic growth.

Given this volatile backdrop, the strength of the market rebound has surprised some.

To us, it comes down to two key factors: the ongoing strength seen from the company earning season and economic data.

It was announced that the US labour market added 228k jobs in March, which was seen as a real positive considering worries of a slowdown. In the UK, retail sales were much better than expected, while inflation in Europe continued to slow, supporting the outlook for interest rate cuts.

Company results were more of a standout, with the average earnings for companies in the S&P 500 Index seeming to be better than expected. This suggests that companies remain in rude health. However, whilst this is positive, there are signs of caution to note. Outlook guidance from firms was generally lower, with many companies using the word recession. We remain alert to the risk of a trickier time ahead.

We haven’t made it halfway through the earning season yet. Despite all the distractions, it seems we remain on a more ‘normal’ path of growth and inflation presently. Further retracement from Trump’s bombastic trade policy implementation will be taken as a good thing, and with an interest rate cutting cycle likely to restart, we could be in for a more positive period before July.

Key positioning for the portfolios

During April we were able to take advantage of differences in performance across types of investments in adjusting our portfolios to target allocations we set in March.

These changes were implemented on the 10^th of April, which was near the bottom of the fall in financial markets, which was beneficial.

Allocations remain close to our long run targets, with a preference for investments in companies listed in Emerging Markets (less developed economies) over investments in US company shares.

We still favour higher quality corporate bonds and government bonds with minimal exposure to high yield bonds and Emerging Market debt.

Glossary

Bonds (or fixed income)

Types of investments that allow investors to loan money to governments and companies, usually in return for a regular fixed level of interest until the bond’s maturity date, plus the return of the original value of the bond at the maturity date. The price of bonds will vary, and the investment terms of bonds will also vary.

Bond yield

This is calculated by taking the level of interest paid by the bond, divided by the price of the bond, expressed as a percentage. As the price rises, the yield falls and vice versa.

Corporate bonds

Issued by companies and similar to a loan in nature, usually paying a fixed rate of interest.

Emerging markets

Countries with less developed financial markets and which are generally considered riskier than investing in developed markets.

Government bonds

A type of bond, issued by a government. They pay out a regular fixed amount of interest until the bond’s maturity date, when the issue value of the bond should also be repaid. In the UK they are called gilts and in the US they are referred to as treasuries.

High yield or non-investment grade or Sub-investment grade bonds

Bonds that are expected to have a higher risk of defaulting on interest payments or repayment of the issue value on maturity and receive lower ratings from credit rating agencies.

Risks

Typically, there is less risk of losing money over the long-term (which we define as over 5 years) from an investment that is considered low risk, although potential returns may also be lower. Investments considered higher risk typically offer greater opportunities for better long-term returns, though the risk of losing money is also likely to be higher.

The performance information presented in this document relates to the past. Past performance is not a reliable indicator of future returns.

Forecasts are not reliable indicators of future returns.

Some of the main specific risks that apply to the funds that these portfolios invest in are summarised here. If the funds that are held in the portfolios change, the types of investment risk that the portfolios are exposed to will also change.

Fixed income investments, such as bonds, can be higher risk or lower risk depending on the financial strength of the issuer of the bond, where the bond ranks in the issuer’s structure or the length of time until the bond matures. It is possible that the income due or the repayment value will not be met. They can be particularly affected by changes in central bank interest rates and by inflation.

Equities (company shares) can experience high levels of price fluctuation. Smaller company shares can be riskier than the largest companies, companies in less developed countries (emerging markets) can be risker than those in developed countries and funds focused on a particular country or region can be riskier than funds that are more geographically diverse. These risks can result in bigger movements in the value of the fund. Equities can be affected by changes in central bank interest rates and by inflation.

Derivatives may be used within funds for different reasons, usually to reduce risk, which can be called “hedging”. This can limit gains in certain circumstances as well. Derivatives can also be used to generate income or to increase the risk being taken, which can have positive or negative outcomes. The derivatives used can be options or futures which are types of contracts that are dealt on an exchange or negotiated with a third party. More complex derivatives may also be used. Derivatives can also introduce leverage to a fund, which is similar to borrowing money to invest.

Funds may have holdings in investments such as commodities (raw materials), infrastructure and property as well as other areas such as specialist lending and renewable energy. These investments will be indirect, which means accessing these assets by investing in companies, other funds or similar investment vehicles. These investments can also increase risk and experience sharp price movements. Funds focused on specific sectors or industries, such as property or infrastructure, may carry a higher level of risk and can experience bigger movements in value. Certain investments can be impacted by decisions made by third parties, such as governments or regulators.

There are many other factors that can influence the value of a fund. These include currency movements, changes in the law, regulations or tax, operational systems or third-party failures, or financial market conditions that make it difficult to buy or sell investments for the fund.

*Funds that are managed to maintain a specific risk profile, or that invest in other funds that themselves are managed to maintain a specific risk profile, may have their potential growth or income constrained as a result.

*Applicable for the Premier Miton Blend Portfolios only.

Important Information

This is a marketing communication.

Whilst every effort has been made to ensure the accuracy of the information provided, we regret that we cannot accept responsibility for any omissions or errors.

Reference to any investment should not be considered advice or an investment recommendation.

All data is sourced to Premier Miton unless otherwise stated.

Source for performance data: FE Analytics.

All performance figures have been given in £ sterling.

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©Premier Miton Investors. 2025. Issued by Premier Miton Investors. Premier Portfolio Managers Limited is registered in England no. 01235867. Premier Fund Managers Limited is registered in England no. 02274227. Both companies are authorised and regulated by the Financial Conduct Authority and are members of the ‘Premier Miton Investors’ marketing group and subsidiaries of Premier Miton Group plc (registered in England no. 06306664). Registered office: Eastgate Court, High Street, Guildford, Surrey GU1 3DE.

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