Fund Return 2025 - 2026

Fund return to 31 March 2026

Investment Commentary

Provided by Mercer - CERS Investment Adviser

Market Developments

Global equities fell in March with ACWI returning -7.2%, the worst monthly performance since mid-2022. US stocks outperformed both emerging markets and other developed markets due to US energy independence, but they nonetheless posted negative returns. The dollar strengthened, which hurt foreign stock performance from the perspective of an unhedged US investor. Yields rose across the medium-to-long end of the curve amid inflation fears, contributing to negative fixed-income returns. Credit spreads widened for both investment-grade and high-yield bonds as investors turned risk-averse. We saw a classic stagflationary environment in which equities, bonds and other rate-sensitive assets sold off simultaneously, leaving investors with few places to hide apart from commodities. Following the US and Israel conflict, oil prices were volatile and rose materially. Markets positioned for temporary disruptions that would affect Asia and Europe more than the US, given their greater reliance on Middle Eastern energy supplies. Tariffs and AI were secondary themes this month.

US nonfarm payrolls declined by 92,000 in February, well below expectations. The unemployment rate rose slightly to 4.4%, which remains low by historical standards. The Federal Reserve held rates steady but signaled a hawkish stance amid uncertainty about the inflationary impact of higher energy prices. Market expectations for both economic growth and inflation were revised upward; investors still price in one 25-basis-point rate cut in each of 2026 and 2027.

Headline inflation in the US remained at 2.4% year-over-year in February, in line with expectations. Inflation is still above target, and this reading does not yet reflect higher energy prices. Headline inflation also rose in February in the UK, the euro area, and Japan. The Bank of England, the Bank of Japan and the European Central Bank held rates steady in their February meetings while striking a hawkish tone. Listed real assets, such as global REITs and listed infrastructure, had negative absolute performance in March. Commodity returns were strongly positive, driven by the rally in oil prices. Gold, however, finished lower for the month: a stronger dollar and higher yields outweighed safe-haven demand.

Outlook

Over the coming weeks, market direction will depend on whether a proposed ceasefire is credible: considerable uncertainty remains about how the conflict will unfold; at the time of writing, the Strait of Hormuz is largely closed to shipping. Brent crude experienced its largest monthly rise on record in March, which has materially altered expectations for inflation and monetary policy worldwide and put upward pressure on bond yields. Given the continued uncertainty on the ground, financial-market volatility is likely to remain elevated.

Central banks are expected to look through the shock if it proves temporary. If, however, the situation ultimately leads to the collapse of the Iranian regime and an end to its state-sponsored terrorism, that outcome could restore stability to the region, oil markets, and global supply chains. A prolonged conflict, by contrast, could force central banks to tighten policy in response to rising inflation even as economic growth weakens, as we saw in 2022.

Investment Update - March 2026

Notes

• Scheme Year to date performance is the period from 1 June 2025 to the most recent month shown.
• Performance shown is net of annual management charge.
• The investment choices offered by the Trustee will be regularly reviewed and may be varied from time to time.
• Before you choose a fund we recommend that you speak to a financial adviser. 
• If you require further information please contact the CIRT Team at [email protected]