monthly manager commentary
It was a relatively subdued month for equities after the market’s recent strong run. Our general observation is that Growth stocks have largely flat-lined for some time, having performed strongly in 2020, whilst cyclicals, which have enjoyed a strong rally with the prospect of the economy re-opening, have now paused for breath. Certainly, valuations of the cyclical stocks in the Growth portfolio are starting to look quite extended, and now need upgrades to drive further performance. We regard upgrades as entirely feasible, as most of the management teams we speak have set expectations very conservatively, mindful of a possible resurgence in the pandemic and the impact of supply chain issues, which in turn are impacting raw material prices. From a performance point of view there were no particular themes last month with Future (the Fund’s largest holding) and Liontrust Asset Management being our strongest contributors on the back of good results, whilst Clinigen fell sharply when it warned that it would miss profit forecasts due to weak demand for one of its main pharmaceutical products, in part due to disruption caused by the pandemic.
On the corporate front we are seeing an exceptionally high level of IPO activity reflecting a release of pent-up supply caused by BREXIT and then the pandemic. Our observation is that a number of ecommerce businesses have gained scale more rapidly during the pandemic, as consumers and businesses adapted to doing more buying online, so accelerating their plans to come to market. Countering this pick-up in equity supply has been the notable increase in takeovers of UK listed companies particularly by Private Equity.
During the month we bought back into two longstanding favourites in our investable universe, notably Craneware and Mattioli Woods, participating in placings to fund earnings enhancing acquisitions. We also added to Access Intelligence in a fundraise to help them finance a material acquisition. Otherwise, we added to Clinigen and Homeserve on the back of recent share price weakness and banked profits in some of our stronger performers, most notably Future after its strong recent run.
Through May, the UK Economy continued to track ahead of estimates, similar to the broader Global picture. UK business confidence is strong and there are already signs of labour shortages in some areas, such as hospitality. Just how this flows through to inflation, which seems to be the primary concern of the equity market, will remain unclear until[…]
April was another solid month for global markets. In the UK, the earnings season finished as it started with companies continuing to report at or above market estimates, and Q1 and AGM trading updates continued that trend. Despite some very strong starts to 2021, companies continued to temper expectations in forward looking statements, driven by so[…]
The equity market performed well in March, underpinned by a supportive results season with companies for the most part meeting or beating forecasts, which were conservatively set during the pandemic. Updates on current trading have been generally quite upbeat, as companies outside the travel and leisure sector have learnt to adjust to operating eff[…]
February was a mixed month for equity markets from a macro perspective. In the UK, the continued success of the vaccine roll-out allowed the Prime Minister to announce a roadmap to ease restrictions in England, giving companies and consumers a degree of certainty as to the return of more normalised economic activity, reinforced by the extension of […]
UK equities started the year strongly as investors celebrated the December BREXIT trade deal with the UK market, which had lagged the major overseas markets for most of 2020, being seen as investable again. This strong performance was concentrated on large and mid-caps, with a bias towards cyclicals, and as such it left the Growth Fund trailing in […]
Aside from vaccine approvals, December newsflow was dominated by the on-off progress of the UK/EU trade deal negotiations. Having had to extend the timetable, a deal was signed just before the year end, causing a sharp rally in equities at the start of 2021, initially in large caps, having been left behind in 2020, as the UK market was once again s[…]
Market activity in November was dominated by news of successful Covid-19 vaccine trials, with the accompanying hope that these would allow a return to normal life and associated levels of economic activity. As might be expected, the share price gains were weighted most strongly towards value stocks that had been most severely impacted by the pandem[…]
The Fund returned 1.21% in October outperforming its IA UK All Companies benchmark, which posted a -3.23% negative return. Unusually, the technology and healthcare sectors provided both the best and worst contributors to the Fund’s performance, with Boku (fintech), EKF Diagnostics and Polarean (healthcare) leading the way and Clinigen (healthcare),[…]
Volatility returned to the market in September as investors started to fret about the rise in reported COVID-19 cases and the likely impact of tightening restrictions on the economy. With the BREXIT deadline drawing nearer, the prospect of no deal also somewhat dampened the enthusiasm for UK domestic equities. The Fund managed to generate a positiv[…]