Tarrified

In a volatile month Milford funds fared well, and although some of our fund returns were negative, we significantly outperformed underlying markets in our diversified funds. US share markets fell sharply as investors repriced expectations for growth this year amid policy uncertainty and headwinds.

Just three short months ago, investor expectations were of ongoing US outperformance, both economically and from the stock market. Now, expectations are rapidly changing as fading US growth, policy headwinds (partly from tariffs), AI fatigue and stronger stimulus impulses overseas (notably the German fiscal package) have upended the outlook for various asset markets. Through this turmoil, Milford’s diversified funds have performed well. Some of this is down to risk management in our diversified funds, reducing exposure to shares earlier in the year. But our tilt to UK/European stocks (initiated last year) and defensive companies in general has also paid off. In a month when global shares1 sold off 5.0%, it was pleasing to see many of our picks deliver positive performance. Some of these were European holdings, such as telecommunication companies KPN (+6.4%) and BT Group (+3.8%) and electricity provider E.ON (+13.7%).

However, many of our US names also performed well, with stocks such as telecommunications company American Tower (+5.8%), HCA Healthcare (+13.1%) and Elevance Health (+10.1%) all top performers for us last month. NZ and Australian share markets fell less sharply last month – and our key pick energy infrastructure company APA Group (+7.0%) continues to deliver strong performance. Bond investments provided modest returns in March. Overall, it was our defensive mix of share investments that contributed to the stronger performance vs underlying markets. Looking ahead, uncertainty around tariffs and other government policy in the US lowers our conviction levels. But a policy induced slowdown can also be mitigated by a policy reversal, an outcome that is likely at some point in the future. More stimulative policy settings in Europe are creating investment opportunities, but we are being patient as tariff headwinds can also cause volatility in the short term. In all, this remains an environment where risk management is key, allowing us to be patient and look for good opportunities to invest in companies that can perform going forward.

1 MSCI World Index in local currency