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 2019 - Latest commentary
UK equities rallied in June as global equity markets recovered from the correction in May. The US provided the lead, with a dovish Fed meeting providing the confirmation investors needed that monetary policy is now likely to become looser. Perhaps the clearest barometer of the changed sentiment is seen by the strong out-performance of the mining sector in the month, with precious metals in particular gaining from the prospect of lower real interest rates. With this return to a “risk-on” sentiment, other sectors out-performing include industrials and technology whilst consumer staples was the only notable laggard.
The fund lagged the overall market, with stock selection being negatively impacted by a number of issues. The revived possibility of a “no-deal” Brexit spooked investors in domestic stocks such as Lloyds Bank, OneSavings Bank, Great Portland Estates and Howden Joinery, while stock specific factors weighed on IQE (earnings downgrade on Huawei impact) and Rolls Royce (negative Paris air-show commentary). Positive contributions from continuing strength in Sage and Rio Tinto, and tentative recoveries in Wood Group and Prudential, were insufficient to make up the lost relative ground.
This was an active month which also saw a significant inflow of new money into the fund. We continued to build positions in recent new holdings, most notably AstraZeneca, but also Rolls Royce, Intercontinental Hotels and Taylor Wimpey, as well as topping up laggards such as Lloyds Banking, Tui and XP Power. In contrast, we sold out of ITV (competitive risks), Kenmare and Hipgnosis Songs (both illiquid small caps).
In the near term fluctuating sentiment on Brexit and global trade wars will continue to be a source of volatility. Notwithstanding the numerous issues currently weighing on investor sentiment, however, the fact is that underlying economic momentum in the UK is surprisingly resilient. Given the already gloomy market sentiment towards domestic stocks only a “no deal” Brexit remains as a possible negative surprise shock.
Previous months’ commentaries are contained within the fund factsheets.