To outperform inflation.
Actively managed with an ethical objective investing in a wide
range of either ESG or SRI Exchange Traded Funds (ETF) to
produce significant diversification and exceptional liquidity at
very low cost.
We screen out any fund with significant exposure to
securities (be it shares or bonds) involved in:
| Top 10 Holdings | % of Portfolio |
|---|---|
| UBS MSCI US Liquid Corporates Sustainable UCITS ETF | 15.1 |
| iShares MSCI EM SRI UCITS ETF | 6.7 |
| iShares MSCI EM IMI ESG Screened UCITS ETF | 6.6 |
| Invesco FTSE All Share ESG Climate UCITS ETF | 6.6 |
| UBS MSCI UK IMI Socially Responsible UCITS ETF | 6.5 |
| Xtrackers MSCI UK ESG UCITS ETF | 6.5 |
| iShares GBP Ultrashort Bond ESG UCITS ETF | 5.6 |
| iShares MSCI Europe ESG Screened UCITS ETF | 4.4 |
| L&G Clean Water UCITS ETF | 4.1 |
| iShares Core MSCI EM IMI UCITS ETF | 20.1 |
| Number of Holdings | Yield to Maturity | Maturity | Duration | S&P Rating |
|---|---|---|---|---|
| 1,125 Corp. Bonds | 5.36% | 8.49 | 5.06 | A/A- |
| Number of Holdings | Best Dividend Yield Forward 12m | Best Price to Book Forward | Best P/E Ratio | Best LTG EPS |
|---|---|---|---|---|
| 5,994 | 3.40% | 2.0 | 12.7 | 12.10% |
| Ethical (ESG) | 8.2% |
|---|---|
| Asia Pacific Ex. Japan (MSCI Asia Ex Jap) | 16.4% |
| Em Markets (MSCI EM) | 15.9% |
| Japan (MSCI Japan) | 14.4% |
| US Equities (MSCI USA) | 12.3% |
| UK Equities (MSCI UK) | 10.4% |
| UK Index-Linked Gilts (Barclays UK Infl Linked) | 9.7% |
| Europe Excl UK (MSCI Eur. Ex UK) | 9.6% |
| UK Gilts (Bloomberg UK Govt All>1 Yr) | 7.2% |
| UK Corp Bonds (iBoxx Large Cap TRI Index) | 5.6% |
Please note: performance is based on the monthly performance of the first client discretionary portfolio after all charges. Individual client portfolios may differ due partly to differences in the timing of initial investment or withdrawals or rebalancing. The SCM Direct Ethical (GBP) Benchmark is inflation (the return of the UK RPI All Items Index) Investing in Exchange Traded Funds may expose the investor to several risks, some of which are specific to Exchange Traded Funds and some of which are general investment risks.
| 12m to 31/03/2021 | 12m to 31/03/2022 | 12m to 31/03/2023 | 12m to 31/03/2024 | 12m to 31/03/2025 | 12m to 31/03/2026 |
|---|---|---|---|---|---|
| 25.6% | 2.8% | -2.2% | 7.6% | 3.7% | 11.3% |
Source: SCM Private LLP
Past performance is not a guide to future returns. The value of investments and the income from them can go down as well as up, so investors may not recover the amount of their original investment.
| ALL Fees & Charges | Percentage |
|---|---|
| SCM Discretionary Fund Management Charge | 0.40% |
| Underlying ETF costs (KIID Ongoing Charge) | 0.19% |
| Transaction Costs of buying/selling funds | 0.12% |
| Transaction Costs within funds | 0.07% |
| Custody & Administration Fee | 0.12% |
| Total Fees & Charges | 0.90% |
During March, SCM increased its allocation to UK government bonds (gilts) across most portfolios as ten-year gilt yields rose above 5% for the first time in over a decade.
March 2026 was the most turbulent month for global markets since the pandemic, as US military strikes on Iran triggered a dramatic repricing across virtually every asset class. The S&P 500 posted its largest monthly decline in over a year, Brent crude its largest quarterly gain (94%) since the Gulf War, while gold fell sharply as deleveraging overtook defensive buying. The FTSE 100 and Emerging Markets held up better.
When Growth Fears Overtook Inflation Concerns
The key development was the pivot in bond markets. Investors initially pushed yields higher on inflation concerns, then reversed course as surging crude acted as a consumption tax rather than a demand-pull catalyst. Powell dampened rate-hike expectations, briefly driving an equity recovery.
Earnings Resilience and Stagflation Risk
Despite the macro shock, earnings estimates held up. Excluding the Magnificent Seven, 2026 estimates for the remaining S&P 500 constituents actually rose during March, putting a floor under valuations. With inflationary and stagflationary scenarios posing risks to conventional 60/40 models, and bond-equity correlations turning positive, a genuinely multi-asset, diversified approach is more important than ever.
SCM Portfolios
When ten-year gilt yields crossed 5% on 20 March, their highest since the 2008 financial crisis, we identified a significant mispricing. The 80-basis-point spike since Operation Epic Fury was driven by term premium, not UK credit deterioration. We made two changes across most portfolios (excluding the ESG portfolio, which does not hold government bonds). We sold a 10% corporate bond allocation and bought a 15+ Year Gilt ETF, with 20-year yields at 5.58%. We replaced the 7% overnight-rate allocation with a UK Gilt 1–5 Year ETF, where five-year yields of 4.66% exceeded the 3.75% Bank Rate, increasing gilt exposure from 42% to 59% of the bond portfolio.
We believe the market is treating a transient energy shock as a structural crisis. In 2008, 5% gilt yields reflected bank failures and a credit freeze. Today, they reflect an oil price spike on an economy with GDP forecasts of 0.6% (Vanguard) to 1.1% (OBR).
Consider the real yield arithmetic: ten-year gilts yielded 5.05% against a breakeven inflation rate of approximately 3.5%, implying a real yield of around 1.5%. But that breakeven embeds energy-inflated expectations. If inflation returns to the Bank of England’s 2% target by late 2027, as forecasters expect, investors locking in at 5% earn a real yield above 3%, double the long-run average.
Two-year gilts at 4.66% price in rate hikes well above the 3.75% Bank Rate, yet the Bank views the inflation overshoot as temporary. The gilt–Bund spread above 200 basis points prices UK sovereign debt like peripheral Europe, despite Britain having its own central bank and currency.
Since execution, ten-year yields have fallen over 30 basis points to 4.71%. A further 100-basis-point decline could generate capital returns of 15–20% for the 15+ Year Gilt ETF, plus the running yield.
Alan Miller, Chief Investment Officer
9 April 2026
