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
December 2018 - Latest commentary
UK equities fell in early December once it became clear that Theresa May’s Brexit deal was unlikely to be approved by parliament. However, the UK market was surprisingly resilient in the remainder of the month, even as US equities plunged amid chaotic trading on fears of Fed policy overkill and rising economic risks. Over the month UK equities fell modestly and actually out-performed other leading global equity markets. Oil and most other commodities were also weak, whilst government bonds and gold rallied in this typically “risk-off” market climate. UK sector returns seem slightly at odds with this backdrop, indicating perhaps investors’ confusion around so many varying risk factors at the present time. The strongest outperformer was the materials sector, while telecommunications, services and utilities underperformed.
The fund performed in line with the index benchmark over the month. The largest positive contributors were Anglo American, which held a well-received investor day, and Rio Tinto. However, some of the benefit was offset by not holding BHP, which also performed well and was the largest relative detractor. Our technology sector holdings experienced disparate returns as Sage, Integrafin, Sophos and First Derivatives all saw tentative rallies following recent valuation compression, whilst Micro Focus fell on profit taking and IQE remained weak on de-stocking concerns in the Apple supply chain. Valuation considerations also supported several of our UK domestic stocks despite poor economic sentiment, with Taylor Wimpey, Whitbread, Howden and One Savings Bank all adding value. One notable exception was ITV, which fell on concerns over lower advertising spend. Other significant detractors were Wood Group and Prudential, which seemed to be hurt by negative sentiment regarding lower oil prices and the global economy. December was a quiet month activity-wise. We added to our new position in Taylor Wimpey and topped-up GlaxoSmithKline, funded by trimming John Laing and Bloomsbury. Finally, we switched money from One Savings Bank into Lloyds. Current concerns for the global economy appear somewhat overdone, suggesting that depressed market sentiment and modest valuations could provide scope for a rally in due course.
Brexit uncertainty remains the main obstacle to a sustainable rally in UK equities, which offer excellent value under any scenario barring a chaotic no deal Brexit.
Previous months’ commentaries are contained within the fund factsheets.