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
July 2019 - Latest commentary
US markets advanced by about 1.5% in July 2019, following the footsteps of the 7% rise in June. This has put the year-to-date to mid-year advance of the US markets at around 20% in seven months, with six rising months, making it one of the best years ever for markets.
Interest rates were relatively stable over the month, sticking around the 2% level despite intra-month volatility. Year-to-date however, interest rates have lost more than 60bps and over one year they have lost close to 1%. The US dollar advanced nicely in July, adding around 2%. Oil remained in the mid-50s range, having been volatile over the past year. Commodities declined, losing about 2% on average. Gold had another strong month, moving from $1,400 an ounce to close around $1,450, equating to an advance of 20% in twelve months.
The value style of investment underperformed the markets again in July, following an ok month in June. It advanced marginally, underperforming growth by 1.5% as it kept pace with the markets’ strong 7% advance. Year-to-date growth is outperforming value by 6-7%. Over three and five-year cycles, underperformance stands at 30% and 47% respectively, while the ten-year differential has widened to 106%.
Technology, financials and communications services acted as the best sectors in July. Energy, health care and utilities declined over the period. In M&A activity United Technologies proposed to acquire Raytheon Technologies.
The fund underperformed the markets and style in the month of July. Stock selection drove the underperformance, mostly within the consumer staples and materials sectors but sector allocation was also a negative driven by style. Currency was broadly neutral.
The portfolio exited the month with a price-to-earnings ratio of 10.6 versus the markets at a ratio of 19.6, equating to a discount of 46%. Other value metrices showed similar discounts on average. On a price-sales basis however the discount was back to 70%, for a widening over the past two months from the 60% levels. This was coupled with an average leverage which was significantly lower to the markets’ level, while the average ROE was higher. The portfolio’s dividend yield was around 3%, with active share hovering around 95%.
Previous months’ commentaries are contained within the fund factsheets.