Mundy said that markets continue to price in a best case scenario with little regard for the potential tail risks, which 'remain as significant as ever'.
He added that confidence in the ability of central banks to take the right action remains high: "Despite disappointing earnings growth and high equity valuations investors appear more nervous of missing market gains than having exposure to losses".
During the quarter to March 2014, Mundy sold down positions in Vodafone and Signet Jewelers, which had performed well, reinvesting the proceeds in laggards such as BP, HSBC and Royal Dutch Shell. HSBC and Royal Dutch Shell remain the two largest holdings in the portfolio, at 8.4% and 8.3% respectively.
Over the quarter, the Temple Bar saw an NAV total return of 0.6%, ahead of the FTSE All Share index benchmark return of -0.6%. The trust's long term performance is solid, with the trust's NAV up 161.7% over the past years, compared to a return from the wider UK Equity Income sector of 138%. Mundy's contrarian style has seen him keep pace with the wider sector in 2012 and 2013, but he has not matched the outperformance he saw in 2009-2011.
Mundy has been a bear of equity markets since the giddy rises seen in 2013. He has been clear that he sees relatively little value in equity markets at current levels and is holding cash across both his open- and closed-ended funds. In particular, he has suggested that small and mid cap stocks look over-valued.
The trust has a dividend yield of 3.1% for the quarter. A final dividend of 22.65p per share was paid on 31 March 2014. The total payment for the year ended 31 December 2013 was 37.75p per share.
