The fund was launched in 2012 and is managed independently of a benchmark. This concentrated strategy invests only in the least volatile businesses that can offer greater resilience than the broader equities market.
 

The fund:
  • High conviction portfolio of 25-30 businesses which are likely to prove more resilient across the cycle

  • A focus on value opportunities amongst non-cyclical companies, targeting parts of the market that have temporarily fallen out of favour

  • Investing in companies with high sustainable returns on capital with the aim of delivering CPI +6%

December 2018 - Latest commentary


World markets retracted in the high single digits in USD terms, driven by the US, as the hopes for a trade deal with China were quickly dashed and as the arrest of Huawei’s CFO in Canada further added to political tensions between the two countries. The falling oil price, a flattening yield curve combined with high levels of corporate and government debt cast doubts over inflation expectations and the sustainability of the US growth cycle. The threat of a Federal shutdown at the end of the month did not help sentiment. The USD was either flat or down against the main currencies, while the oil price continued to fall, reaching $50 as OPEC failed to reach an agreement on production cuts. In this environment materials and utilities performed the best with energy, industrials, healthcare, IT and financials lagging the overall market.

The fund fell in absolute terms, just underperforming the broader equity market and underperforming its CPI benchmark. Despite the defensive nature of the fund, the sharp fall in the healthcare sector had a detrimental impact on performance. AmerisourceBergen, UnitedHealth and Allergan were all notable detractors as their stock price was dragged down along with the rest of the healthcare sector. Pharma distribution and plan management remain our favourite hunting grounds as they are the least exposed to political or business disruptions, while being naturally hedged against inflation and benefiting from powerful economics in the form of scale and entrenched relationships. Allergan in particular also saw some regulatory obstacles in France for a minor cosmetic product. Elsewhere, the more cyclically sensitive names in the portfolio like Tupperware, Viacom and Aon fell in the low double digits. Conversely, our consumer staples positions were strong contributors in the form of our tobacco holdings as well as Procter & Gamble. WPP also performed well after laying out its restructuring plan at its analyst day, corroborating our long-term thesis for low organic growth and margin expansion. The fund further benefited from the defensiveness provided by takeover activity on two of our companies – Dun&Bradstreet and Express Scripts. This month we added to WPP, Zimmer Biomet, AmerisourceBergen, Imperial Brands and BATS.

Previous months’ commentaries are contained within the fund factsheets.

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Fund disclaimer

Past performance is not a guide to future performance. Do remember that the value of an investment and the income generated from them can fall as well as rise and is not guaranteed, therefore, you may not get back the amount originally invested and potentially risk total loss of capital. A table with five years performance is available in the fund factsheets below.

The fund has holdings which are denominated in currencies other than sterling and may be affected by movements in exchange rates. Consequently the value of an investment may rise or fall in line with the exchange rates. The fund holds a concentrated portfolio which could mean that it will be volatile when compared to its benchmark.

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