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
February 2019 - Latest commentary
UK equities continued to rally in February in tandem with other global equity markets. The gradually moderating pace of global growth has been taken positively by investors as monetary policy is now less likely to become overly restrictive. Hopes for progress in trade talks between the US and China have also helped to lift sentiment.
However, UK equity moves have been dominated by Brexit issues, with the reduced likelihood of a “no deal” Brexit driving a rally in Sterling and supporting the shares of domestic UK businesses such as housebuilders and banks.
The portfolio performed satisfactorily in the month. Our large-cap technology sector holdings, namely Micro Focus and Sage, both performed well, while the volatile smaller cap holding in IQE also saw some recovery. We also benefitted from our exposure to domestic UK businesses, with new holding Taylor Wimpey continuing to rally and well received results from Lloyds Banking, helped by strong dividend returns. A healthy cash return to shareholders was also a feature of results from Rio Tinto. Finally, our new holding in Rolls Royce performed well, notwithstanding some profit taking post the results at month-end.
The largest negative factor was the impact on relative performance of not holding AstraZeneca, whose shares rallied strongly following results that showed good growth from several new drugs. We also suffered from our holding in travel business Tui, which saw price weakness after guiding down current year earnings (to flat) based on challenging near term conditions in tour operating. The main focus of activity was to increase our positions in Taylor Wimpey and Unilever. We also topped up Tui following weakness. Finally, we sold out of several smaller company holdings, these being Bloomsbury Publishing, John Laing, Crest Nicholson and Sophos. Whilst current political and Brexit uncertainty is unhelpful, underlying economic growth remains satisfactory and UK equity valuations are certainly not expensive.
Previous months’ commentaries are contained within the fund factsheets.