It’s all about the TACO (“Trump Always Chickens Out”)
After a volatile April, global share markets continued their climb in May leaving global shares close to all-time highs. Milford’s funds delivered solid performance on the back of these moves with many of our holdings posting strong gains last month.

Investors are being whiplashed by US policy announcements. Aggressive tariff policy is announced, only to be paused or rescinded a couple of days later. This has come to be known as the TACO trade, on account of Trump’s swift retreat from his own more market unfriendly tariff policy announcements. It also means that investors are increasingly accustomed to these policy announcements, and there is a growing sense of complacency among investors.

Our global stock picks delivered much of the gains last month. European bank stocks continue to show strong returns, with Bank of Ireland (+17.0%), Commerzbank (+17.4%) and NatWest Group (+9.7%) notable performers. Technology stocks have recovered well too, with Amazon (+11.2%), Meta (+17.9%) and Intuit (+20.1%) highlights for us. On the flipside, US payment processor Fiserv disappointed last month (-11.8%), but we maintained our holdings. Australian and NZ stocks also rallied, including good performance from fuel import terminal Channel Infrastructure (+12.1%) and real estate company Precinct Properties (+9.0%). In Australia, we saw strong performance from our gold stocks such as Genesis Minerals (+22.3%), as well as family tracking app company Life360 (+51.9%).

Bond markets remain volatile as investors try and understand the trajectory of global growth and government spending (that will need to be financed by bonds). Corporate bonds outperformed government bond equivalents, helping our performance as we typically invest in corporate bonds.

Government policy continues to dominate monetary policy in importance for investors. Central banks are either sidelined by the inflation outlook (e.g. the US), or have already reduced interest rates towards neutral. That said, central banks will respond to much weaker growth with further cuts. This means short-term bonds offer some value for diversified portfolios. Meanwhile, governments continue to spend (across the US, Europe & China), reducing the likelihood of economic weakness. This creates a reasonable outlook for investments going forward, once we can move past the policy uncertainty.