Managed since December 2014 by the same manager and with the MSCI North America Index as a benchmark, the fund invests in attractive US companies with sustainable dividend yields.
Is managed by a highly experienced and top performing value manager
Adopts a disciplined value style with a distinctive quality overlay
Offers lower risk than the broad market with low correlations to other US funds
September 2018 - Latest commentary
US markets continued their strong advance in September, adding another 0.5% to what has already been a strong year. The stock market hit new all-time highs during the month, and have now posted a return of 10.5% year to date. Momentum wasn’t quite as strong as in recent months, where returns of in excess of 3% were delivered. While the USD appears little changed on the month, there were significant fluctuations intra-month, recovering towards month end. Volatility continued to retreat nicely, falling below 12 having hit highs of around 40 in January. The 10-year treasury yield finally broke out of the recent trading range to finish the month at 3.10%, having started the month near 2.85%. The oil price had a strong month, with the differential between WTI and Crude coming in slightly, while gold retreated.
The outperformance of growth over value continued in the month of September, with all of the market’s returns coming from the growth universe. Year-to-date growth performance has now advanced more than 17%, while value added less than 4%, a staggering differential of 13% in nine months alone. This follows in the footsteps of 2017 when growth outperformed value by 16%. Over a 5-year period growth is now ahead by 50% while over 10 years it is ahead by 120%. Healthcare had a great month accounting for most of the market’s advance. Energy, Industrials and Technology also did well. Financials took a breather and was the worst sector over the month. In corporate news, Amazon followed Apple to become the second $1trillion market cap company; while Coca-Cola bought Costa from the UK company, Whitbread.
The fund outperformed the markets in September, which was all the more notable given the difficult period for value stocks. Stock selection drove the outperformance, while sector allocation was a minor positive. Currency exposure (Canadian Dollar) was also a positive. Stock selection was most positive in Consumer Discretionary, Telecoms, Materials and Financials, with some offset from Technology as growth continued to lead the way. On a sector basis, allocation was positive in Staples and Financials, but countered by negative performance in Healthcare and Industrials names. The portfolio’s average dividend yield remained around the 3.3% level through September, while the market’s yield fell to 1.8%, making for a historically attractive wide differential of 150bps - levels which have not been seen for some time. Other valuation metrics also showed similar opportunity, with discount levels of anywhere from 30 to 50% against the wider market. The Fund continues to exhibit very strong value credentials, with a price to sales valuation at a discount of 70%. This is coupled with an average leverage level which is around 40% lower. The Fund is highly differentiated from the broad index as evidenced by an active share measure of 93%.
Previous months’ commentaries are contained within the fund factsheets.
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 invests geographically in a narrow range, there is an increased risk of volatility which may result in frequent rises and falls in the Fund's share price.