M&G Credit Income Trust reports mixed Q1 performance

LONDON - M&G Credit Income Investment Trust plc (LSE:MGCI) has released its quarterly review for the period ending March 31, 2025, revealing a net asset value (NAV) total return of +1.36%, which underperformed its benchmark return of +2.13%. The review, accessible on the company’s website, details the trust’s performance amid a challenging economic climate marked by significant market volatility and geopolitical shifts.

The first quarter of 2025 was characterized by financial turbulence due to factors such as President Trump’s tariff campaign, fiscal policy changes in Europe, and a new Chinese AI model. Major economies saw slowed economic growth, with the US GDP growth decelerating to 2.4% in the last quarter of 2024, and the UK experiencing marginal growth. Rising inflation rates remained above central bank targets, prompting concerns of stagflation and a potential recession.

European defense spending saw a drastic reprioritization following the US’s suspension of military aid to Ukraine and doubts about its commitment to NATO allies. Germany’s announcement of a historic fiscal package aimed at stimulating economic growth and addressing its contracting economy led to a sharp increase in bund and gilt yields.

The trust’s underperformance was attributed to a softening in credit, with spreads widening over the quarter. Despite this, the portfolio’s performance was approximately in line with the ICE BofA 1-3 Year BBB Sterling Corporate Index and outperformed other indices. The trust maintained a defensive position, focusing on private asset investments, which included a securitised note, a senior floating rate tranche in a microfinance debt fund, a direct lending loan to a UK hospitality chain, and an additional investment in the M&G European Loan fund.

During the quarter, the trust increased its market capitalization by £6.5 million following a successful placing and retail share offering, with the additional cash initially invested in the AA-rated M&G Investment Grade ABS fund.

Looking ahead, the trust’s management team acknowledges the geoeconomic fragmentation resulting from recent political developments and intends to maintain a defensive portfolio position in anticipation of continued market uncertainty. The team remains prepared to reallocate capital should market conditions present attractive investment opportunities.

This financial update is based on a press release statement from M&G Credit Income Investment Trust plc.

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