Investment Update – March 2025

What happened in markets?

US equity markets underperformed over the month. The S&P 500 Index returned -2.63%, while US Small Caps proxied by the S&P SmallCap 600 Index returned -6.97%, both in GBP terms. The US administration’s stance on tariffs and some signs that US economic data is weakening have begun to question US exceptionalism. Whilst the market had assumed that Trump would be reluctant to tolerate much in the way of stock market weakness, this is being re-appraised given the President’s recent comments that short-term pain may be required to achieve his longer-term goals.

European equities were positive over the month, with the MSCI Europe ex-UK Index returning 1.58%. Economic data here has been somewhat more positive than expected, whilst news of potential very large German spending on infrastructure and defence has acted as a very positive catalyst. The prospect of an end to the war in Ukraine is also generating renewed interest in European equities.

Whilst bonds have delivered reasonable returns YTD, most of this came in February. Over the month, US Treasuries outperformed both Gilts and European Government bonds. Credit was also positive, across both investment grade and high yield.

*All returns in Sterling. Source: Morningstar Direct

What did we do in the funds?

In VT Esprit Careful Growth and VT Esprit Tactical Balanced, we continued to increase our exposure to gold. The asset class offers a diversified source of returns and remains appealing in a world of rising geopolitical tensions.

Across VT Esprit Tactical Balanced, VT Esprit Tactical Growth, and VT Esprit Tactical Alpha Plus, we increased our exposure to European equities on several occasions. There is positive momentum behind Europe and the prospect of looser fiscal policy and an end to the war in Ukraine could be a meaningful tailwind in the near term.

We also introduced an S&P US Equal Weighted fund to diversify our exposure away from the large-cap technology stocks which dominate US large-cap indices. 

So far, this has been a relatively successful investment. Again, this was done incrementally and opportunistically over the month.

In VT Esprit Tactical Alpha Plus we introduced a new fund, the Redwheel UK Equity Income fund. The fund is focussed on uncovering undervalued opportunities in the UK and provides useful diversification to US equities.

What is the outlook?

Patience may be required over 2025 while investors digest the implications of President Trump’s agenda, not to mention the daily ratcheting up and down of trade tensions. The market dislikes uncertainty and some clarity on the economic outlook of the US, and in particular, some policy stability would be welcome.

Technology stocks are undergoing a correction in sentiment and valuation that could persist, even if the market gets better news on the economic and policy front.

At this stage, we’re not making any major changes to our overall asset allocation. We’re prioritising diversification within the portfolio to protect our investors against the major risks we have identified.

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Do you want to learn more about how we invest?

Learn more about our investment process, our funds and the Investment Team here.

If you have further questions about investing with Shackleton or want to get in touch with our team, please contact us. We are always happy to help.

Written by:
Charlie Lloyd
Head of Investment, Shackleton

Important information:

This document is issued by Shackleton, which is a trading style of Shackleton Advisers Limited. Shackleton makes no warranties or representations regarding the accuracy or completeness of the information contained herein.  We have prepared the following document based on our view of the current market. Nothing in this document shall be deemed to constitute financial or investment advice in any way. We recommend you speak to your adviser before making any decisions.  This document shall not constitute an invitation or inducement to any person to engage in investment activity. Past performance is not a guide to future returns and the value of capital invested and any income generated from may fluctuate in value. 

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