Brunner Investment Trust PLC Fund Data

Events in the Middle East dominated headlines throughout March. The attack by the US and Israel on 28th February killed the Iranian Supreme Leader and other senior military heads in addition to targeting infrastructure. This led to retaliatory strikes by Iran across Gulf states that they perceived to be helping the US, and an almost total blockage of the Strait of Hormuz. This vital shipping lane handles around one-fifth of the world's energy exports and is also a key route for other important materials such as fertilisers and helium. Oil prices surged to their highest levels since the Ukraine War. The International Energy Agency said that the war with Iran represented 'the largest supply disruption in the history of the global oil market'. The response in the financial markets was swift. US Treasuries sold off in one of the worst monthly performances of recent years as inflation expectations soared and any hope of imminent rate cuts were abandoned. Investors are now projecting an increase in borrowing costs in the UK, a significant change from the rate cuts for 2026 that were anticipated at the beginning of the month. Central Banks face a major dilemma: higher energy prices and trade interruptions threaten higher inflation, whilst lower confidence and the tax like impacts of higher oil prices challenge growth forecasts. Given the need to prevent an inflationary spiral, tighter monetary policy is the normal outcome. Only the Energy sector ended the month in positive territory, boosted by the high oil price. Utilities were the next best performer, whilst rate sensitive areas of the market such as Industrials posted the biggest losses. All major indices retreated, but it is worth noting that the UK is one of the few with positive performance since the turn of the year. The UK market composition has a high weighting to the Energy sector and a skew towards the value end of the market which has comfortably outperformed both growth and quality indices of late. The portfolio performed ahead of its blended benchmark in March, boosted by long term energy holdings TotalEnergies (France), Shell (UK) and the more recently acquired ConocoPhillips (US) which all returned more than 15% over the period. Brunner's Net Asset Value (NAV) total return for February was -5.2%, ahead of the benchmark return of -5.6%. Certain holdings in the Financials sector also performed well. IG Group, the UK listed leader in online financial trading, reached an all-time high in the month. The company reported strong financial results for 2025 and suggested revenue growth would be at the top end of its 2026 guidance. UK insurer Admiral was another holding in this sector where shares performed strongly after solid 2025 financial results and a number of analyst upgrades. Kia Corp was the biggest single detractor in March, but remains one of the strongest holdings year to date. The Korean indices had performed exceptionally in the first two months of the year and the risk off sentiment after the outbreak of the Middle East conflict resulted in investors taking profits. Kia fell in line with the index, with an absence of any negative company specific news flow. Schneider Electric, Barratt Redrow and Assa Abloy also underperformed, operating in areas of the market that are most sensitive to interest rate rises and negative sentiment around economic growth forecasts.

Events in the Middle East dominated headlines throughout March. The attack by the US and Israel on 28th February killed the Iranian Supreme Leader and other senior military heads in addition to targeting infrastructure. This led to retaliatory strikes by Iran across Gulf states that they perceived to be helping the US, and an almost total blockage of the Strait of Hormuz. This vital shipping lane handles around one-fifth of the world's energy exports and is also a key route for other important materials such as fertilisers and helium. Oil prices surged to their highest levels since the Ukraine War. The International Energy Agency said that the war with Iran represented 'the largest supply disruption in the history of the global oil market'. The response in the financial markets was swift. US Treasuries sold off in one of the worst monthly performances of recent years as inflation expectations soared and any hope of imminent rate cuts were abandoned. Investors are now projecting an increase in borrowing costs in the UK, a significant change from the rate cuts for 2026 that were anticipated at the beginning of the month. Central Banks face a major dilemma: higher energy prices and trade interruptions threaten higher inflation, whilst lower confidence and the tax like impacts of higher oil prices challenge growth forecasts. Given the need to prevent an inflationary spiral, tighter monetary policy is the normal outcome. Only the Energy sector ended the month in positive territory, boosted by the high oil price. Utilities were the next best performer, whilst rate sensitive areas of the market such as Industrials posted the biggest losses. All major indices retreated, but it is worth noting that the UK is one of the few with positive performance since the turn of the year. The UK market composition has a high weighting to the Energy sector and a skew towards the value end of the market which has comfortably outperformed both growth and quality indices of late. The portfolio performed ahead of its blended benchmark in March, boosted by long term energy holdings TotalEnergies (France), Shell (UK) and the more recently acquired ConocoPhillips (US) which all returned more than 15% over the period. Brunner's Net Asset Value (NAV) total return for February was -5.2%, ahead of the benchmark return of -5.6%. Certain holdings in the Financials sector also performed well. IG Group, the UK listed leader in online financial trading, reached an all-time high in the month. The company reported strong financial results for 2025 and suggested revenue growth would be at the top end of its 2026 guidance. UK insurer Admiral was another holding in this sector where shares performed strongly after solid 2025 financial results and a number of analyst upgrades. Kia Corp was the biggest single detractor in March, but remains one of the strongest holdings year to date. The Korean indices had performed exceptionally in the first two months of the year and the risk off sentiment after the outbreak of the Middle East conflict resulted in investors taking profits. Kia fell in line with the index, with an absence of any negative company specific news flow. Schneider Electric, Barratt Redrow and Assa Abloy also underperformed, operating in areas of the market that are most sensitive to interest rate rises and negative sentiment around economic growth forecasts.