March 2026 Review

• The final day of February saw the US, in conjunction with Israel, initiate strikes against Iran, toppling its leader in the process. Energy prices rose sharply.  On the last day of March equity and bond markets rallied in response to comments from US President Donald Trump that an end to hostilities was likely within two to three weeks.
• In between, financial markets suffered much turbulence with bonds and equity indices falling.
• The closure of the Strait of Hormuz, restricting the flow of oil by some 20 million barrels per day, has seen fuel prices rise precipitously across the world’s economies leading to fears of a substantial increase in inflation.
• Already stretched consumers are now faced with paying much more for their fuel as well as food – fertiliser supplies have also been disrupted by Strait of Hormuz’s closure.
• Central Banks like the Bank of England, who were looking to lower interest rates further in response to declining inflation, have now gone on hold, with futures markets suggesting a potential rise. Comparisons to 2022 are flawed for the following reasons:
  • Interest rates are substantially higher now than they were in 2022, when the Bank of England and other central banks were scrambling to raise rates as inflation soared post Covid.
  • Economic activity is either weak or weakening in the major economies.
  • Raising official interest rates would act as a further burden for consumers already grappling with a rising cost of living which has just been made worse.
  • Supplies of essentials including labour were in short supply, so workers had significant leverage to raise wages in 2022, whereas now labour markets are struggling to deal with rising unemployment and hence little bargaining power exists. The following chart of the UK employment landscape is evidence of that difference:

Perspective

A swift resolution to the conflict in the Middle East is perceived to be within reach, although financial markets are oscillating daily depending on the rhetoric emerging from the White House.  At times like these, it’s important to recognise the benefits of looking longer term for investment returns.  Almost a year ago, on April 2^nd  2025, global equity markets plummeted on larger than anticipated tariffs as part of President Trump’s ‘Liberation Day’.  Just a week later, Trump’s stance softened and markets recovered quickly.  The following chart sourced from Investment Week illustrates the movement of four key equity indices over the past year, showing  all of them falling  accompanied by a huge spike in volatility which then subsided.

If one looked at monthly returns, the tumult of one week in April 2025 would likely go unnoticed.

That’s not the case in 2026 as March has been a negative environment for bond and equity prices and it is impossible to know when the current conflict will end and how.

However, we frequently remind readers of the disadvantages of trying to time markets compared to  the benefits of staying invested, as the following chart from JP Morgan Asset Management illustrates.

Your Money

There were no portfolio changes in March.

The figures below show the negative impact on returns in March, but also for context how  that impact has been on 2026 returns over the first quarter  and for the  twelve months to end March 2026.

Portfolio Performance

*The figures for the Plus range relate to the IFSL Pier Plus Funds with effect from 1^st January 2026 and to the Plus Model Portfolios prior to that date.