Mirabaud - Global Diversified Credit Fund DH cap. GBP

Performance update

Inflation concerns and a slower projected path of central bank rate cuts led to negative returns across fixed income markets in December. The Federal Reserve (Fed) cuts rates by 25bps as expected, but moved its dot plot of projected rate cuts for 2025 to show only two cuts, rather than the four shown at the September meeting and the three cuts expected by the market, causing the US 10-year yield to increase by 40bps on the month. The Fed also moved its 2025 inflation forecast higher with risks to the upside. Equities sold off and credit spreads mirrored that, but with a lower beta. European assets outperformed the US, reversing some of the prior month's Trump and tariff-related weakness.

The fund generated a modest positive performance for December despite the move in global fixed income yields. The largest positive contributions came from subordinated financials, emerging markets and high yield, where exposures to European names rebounded. The largest negative contribution came from investment grade, due to the move wider in rates.

Portfolio activity

We continued to increase the high yield exposure within the fund to reflect an improving economic environment. Following a productive series of issuer meetings, we added to the technology company Cloud Software and initiated a new position in the printer Deluxe Corp.