Holding steady as cycle turns

Seneca Global Income & Growth Trust’s (SIGT’s) manager, Seneca Investment Managers (Seneca IM), has continued to reduce the trust’s equity weighting, in advance of a global recession it expects in late 2020/early 2021. Consistent with its view, the yield curve has all but inverted (as at 22 March, the gap between three-month and 10-year US treasury bonds was just 3 basis points) and the manager says that in the past, on average, an economic recession has commenced 311 days later. SIGT has recently outperformed its benchmark and global equity markets . Its manager expects its multi-asset strategy to strongly outperform equities in the downturn, though during such a period the trust would struggle against its absolute-return-orientated benchmark.