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.
The fund:
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Is overseen by a highly experienced team with complementary skillsets
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Focuses on companies with high and sustainable returns on capital with structural growth opportunities
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Is a concentrated portfolio with a long-term time horizon
May 2020 - Latest commentary
Equity markets extended their recovery in May, encouraged by the continued fall in viral infection rates and moves by governments to ease lockdown restrictions. With economic recovery underway, the rally broadened out to include several economically sensitive sectors, with materials and industrial stocks performing particularly strongly. The oil price also recouped most of the ground lost since March, although the listed oil stocks continued to underperform. Telecommunication stocks also rallied, notwithstanding an early sharp fall in BT following news of the dividend suspension.
The fund participated fully in the recovery and modestly out-performed the market over the month. Benefit was received from both sector allocation (underweight oil, overweight information technology) and stock selection. The holdings contributing most positively included our latest new purchase, Rightmove, (helped by the re-opening of the housing market), Howden Joinery, Rio Tinto, Sage and Intercontinental Hotels. Also, not holding HSBC and Royal Dutch Shell was positive in relative terms. Partially offsetting negative positions were Taylor Wimpey, Prudential (impact of Hong Kong political risk), Lloyds Banking and Rolls Royce, while not holding Vodafone, BHP and Reckitt Benckiser also detracted from relative performance.
Activity this month saw us sell out completely from Royal Dutch Shell and BAT. We have been underweighted in both stocks for some time and now see much better recovery and longer term growth prospects elsewhere in the market. We added to existing positions in Taylor Wimpey and Rolls Royce, and to our new holding in Rightmove, taking it up to just under 5% of the portfolio.
Several other large holdings were marginally trimmed following strong out-performance, namely AstraZeneca, Integrafin and RELX.
The combination of declining infection rates, substantial ongoing government stimulus and gradual return to work are all encouraging for economic recovery. With a concentrated portfolio, invested across a range of high quality companies offering both structural and cyclical growth, we believe that the fund is well positioned for future growth.
Previous months’ commentaries are contained within the fund factsheets.