Wise Multi-Asset Growth

A first round involving Vice President Vance proved unsuccessful, while a second round later in the month was indefinitely postponed. Although the conflict is far from over, market participants have interpreted the ceasefire and negotiations as signs that both President Trump and the Iranians are starting to feel the costs of the war and are looking for a face-saving way to end it while still claiming victory. Meanwhile, although bombings may have stopped, the Strait of Hormuz remains closed and the impact on energy, food, fertilisers, and critical manufacturing components is increasingly being felt globally. Long transportation times and some supply-chain flexibility mean that the physical impacts of the war outside the region take time to become apparent; however, the longer the strait remains closed, the more evident global dependence on Gulf commodities will become.

On the economic front, inflation is the most obvious data point affected by the conflict, with oil and gas markets rising sharply since the beginning of March. Inflation came in at 2.5% (up from 1.9%) in the Eurozone at the end of March, followed by 3.3% in both the US (vs 2.4%) and the UK (vs 3.0%). Excluding energy and food, so-called core inflation has broadly remained stable; however, higher energy costs and shortages will eventually feed through to consumer prices if the situation is prolonged. As an illustration, Chinese producer prices rose in April for the first time since 2022. Growth, by contrast, has so far been relatively unaffected, although it surprised to the downside in the US on the last day of the month (2.0% annualised in Q1 vs 2.2% expected). The International Monetary Fund (IMF) updated its growth forecasts to reflect the war in Iran, cutting expectations globally. Among developed countries, the largest downgrade was for the UK, reduced from 1.3% to 0.8% for full-year 2026 due to the UK’s heavy dependence on global energy markets. The risk of recession cannot be excluded in the event of further escalation, but investors generally brushed off these fears. Equity markets performed strongly in April, with US and Asian markets notably back to their pre-war levels. Meanwhile, bond markets priced in a higher likelihood of rate hikes (to combat inflation) than rate cuts (to support growth), except in the US, where political pressure from President Trump to cut rates adds a non-economic dimension to the central bank decision. In the last week of the month, central banks in Japan, the US, the UK, and the Eurozone kept rates unchanged and reiterated their base case that inflation will be transitory, while highlighting upside risks to price pressures. Finally, in the UK, political uncertainty with regards to the Prime Minister’s position also contributed to pushing bond yields higher due to fiscal concerns.

Away from macro developments, the mergers and acquisitions (M&A) market continued to build on the strong momentum that began last year, supporting equity investor sentiment, with more than $1.2 trillion of deals announced in the first quarter. This was a record and the third consecutive quarter with more than $1 trillion of announced deals. Earnings also remained supportive, particularly in the US, where Q1 results are expected to be the strongest since 2021, thanks to AI-related themes continuing to be the main driver. This helped large technology companies recover in April, with top index names Nvidia, Alphabet, and Amazon surpassing their previous highs from last November.

In April, the IFSL Wise Multi-Asset Growth Fund rose 4.3%, ahead of the CBOE UK All Companies Index (+2.6%) but behind its peer group, the IA Flexible Investment sector (+5%). This brought performance back into positive territory for the year (+1.1%) and left it flat since the start of the conflict in Iran. Contributors were varied but, unsurprisingly given the recovery in risk appetite during the month, came predominantly from equity funds, particularly those that struggled in the immediate aftermath of the US/Israeli attacks on Iran. Small UK companies performed well, not only as a recovery trade but also thanks to M&A activity, which continued apace. This benefited Odyssean, as well as Amati UK Smaller Companies. M&A also remained a key driver of performance in the biotechnology sector, with International Biotechnology seeing two further positions (including its largest) taken over at premiums of around 35% each. RTW Biotech Opportunities also benefited from the IPO (Initial Public Offering, i.e. when a private company lists on a stock exchange) of Kailera Therapeutics, one of the most promising obesity drug developers. After its first day of trading, the company’s share price was 139% higher than the end-March valuation used in the RTW portfolio. This outcome is particularly pleasing because it illustrates the managers’ full life-cycle investing approach by which they help launch a company from scratch, support it with funding and resources during development, take it public, and remain a cornerstone investor to fully realise the benefits of their investment. Mobius Investment also performed strongly, supported by robust emerging markets, particularly in the semiconductor sector. Finally, Ecofin Global Utilities and Infrastructure saw its discount tighten sharply, helped by its positioning in a sweet spot between defensive utilities and beneficiaries of the push to increase electricity production to meet AI-driven demand.

From a portfolio perspective, we maintained a balanced approach, recognising geopolitical risks while also acknowledging pockets of fundamental strength. We therefore took some profits in our strongest performers, including Odyssean, Ecofin Global Utilities and Infrastructure, BlackRock World Mining, and Pantheon International. Conversely, we topped up relative underperformers such as Fidelity Special Values, Finsbury Growth & Income, Aberforth Smaller Companies, Man Undervalued Assets, and ICG Enterprise. At month-end, we also made a new investment in the Neuberger Berman Emerging Markets Equity fund, a newly launched strategy managed by the former Schroders Emerging Markets team, whose departure last autumn had forced us to exit the fund at the time. As in their previous vehicle, this is a differentiated value strategy in emerging markets and is particularly attractive at present given the sharp discrepancies across the region between expensive parts of the market (typically linked to semiconductors and technology) and more cheaply valued areas.