The fund was one of the first funds to be launched when the firm was established. Benchmarked against the MSCI UK Index, it is a portfolio of UK companies with strong structural growth opportunities and attractive cash flows.
Is overseen by a highly experienced team with complementary skillsets
Focuses on companies with high and sustainable returns on capital with structural growth opportunities
Is a concentrated portfolio with a long-term time horizon
June 2020 - Latest commentary
Equity markets have broadly sustained their gradual recovery from the March crash as most economies are set to benefit from a gradual re-opening. Investor sentiment has been tempered, however, by the continuing rise in COVID-19 cases in some territories, most worryingly in several southern US states.
The infection setback in the US triggered a renewed risk-off phase that has reversed much of the earlier nascent rally in economically sensitive “value” stocks. Sector returns for the full month are therefore variable and somewhat confused overall, with healthcare and consumer cyclical sectors showing losses whilst both utilities and materials have been the largest gainers.
The Fund under-performed in the month, with the negative impact coming entirely following the change of sentiment after 8th June. The largest positive contributors were our life insurance holdings, Prudential and Legal & General, while secular growth stocks such as XP Power and Flutter Entertainment were also helpful. These impacts were offset, however, by the drag from several stocks that experienced aggressive profit-taking, most notably Integrafin, Intercontinental Hotels, Rightmove and Howden Joinery; in all cases these are high quality businesses with excellent long term prospects.
The key feature of activity this month was the receipt of a substantial new money investment that has broadly doubled the size of the Fund. We are completely happy with the current portfolio positioning and so these monies were invested pro-rata into the existing holdings.
The investment outlook is largely dependent on three interrelated factors: the course of the pandemic, the pace of economic recovery and the ongoing level of government spending support. Index averages conceal the highly polarised nature of the current market, which is hardly surprising given that there are obvious winners and losers from the pandemic. Overall, a sustained rapid economic bounce back is considered unlikely, however, as the initial benefit of pent-up demand spending will fade whilst uncertain employment prospects will linger. Nevertheless, with valuations between stocks and sectors being historically widely dispersed, active investors should have plenty of opportunities to add value going forward.
Previous months’ commentaries are contained within the fund factsheets.