SVM UK100 Select Fund shows positive growth

Year to date (to 31/10/2009) the SVM UK100 Select Fund has returned +29.0% compared to +17.9% for the FTSE 100 index.

The effectiveness of Bank of England policy is being questioned. It may need to continue printing money and maintain low interest rates for a prolonged period of time. Markets fear that as a consequence, inflation will accelerate over the longer term. If the economic recovery remains weak and unemployment stubbornly high, any reversal of policy will be strongly resisted by politicians.
 
Markets will continue to worry, but the favourable liquidity background, low interest rates and the fiscal stimulus mean that the risk of the economy faltering is low. The risk will come when the market becomes confident of the recovery, because then there will be a realisation that interest rates must rise.
 
SVM UK 100 outperformed the market during the month. After a strong start, markets suffered as risk aversion rose and investors retreated to more defensive stocks. SVM reduced its exposure to highly economically sensitive stocks, with a view to reinvesting at lower levels. During the month SVM increased its exposure to gold, where the outlook is supported by favourable supply/demand dynamics, and as a hedge against inflation.