The Fund returned 2.71% in July compared to a negative -2.26% for its IA UK All Companies benchmark. The main theme was the strong performance across a number of pre-profit healthcare stocks, where the Fund has quite small positions, with Synairgen leading the way, quadrupling in the period after positive trial results for its COVID-19 therapy, whilst Avacta, Maxcyte, Oxford Biodynamics and Diurnal all performed strongly. Elsewhere Premier Foods continued its run after its strong results at the end of June and Xaar rallied on the back of a reassuring trading update. Finally, RockRose Energy recovered from its COVID-19 lows thanks to a recommended takeover offer. On the negative side both Clinigen and Advanced Medical Solutions fell back after reporting that COVID-19 had impacted their sales, particularly into the elective surgery market, and Boku’s shares also fell back with the market underwhelmed by its interim trading update.
We took advantage of the share price strength to trim some of our strongest performers, reducing holdings in Synairgen, Renalytics, Premier Foods and B&M European Value Retail. On the buy tack we added to Codemasters, anticipating a successful launch of its 2020 Formula 1 video game. We participated in placings to build up more meaningful holdings in Curtis Banks and Inspired Energy. We took advantage of share price weakness to add to Clinigen and Advanced Medical Solutions, in the expectation that their elective surgery markets will recover. We also added to Inchcape and Bodycote after recent underperformance. Finally, we participated in the IPO of Elixirr, a challenger management consultancy business with an impressive blue-chip customer base focused on digital transformation projects.
Monetary and fiscal easing have continued to underpin the equity market, leaving savers bereft of other sensible asset classes in which to invest. Whilst the worst impact from COVID-19 is now hopefully over, as yet there is no medical solution or effective monitoring in most economies, with resultant flare-ups leading to less damaging localised lock-downs. Companies’ results have so far been more reassuring than might have been anticipated with many companies re-instating guidance and some even restoring dividends. Barring the odd exception, the Fund’s holdings have participated in this trend, enabling the portfolio to participate in the rally. With the Fund now somewhat more tilted to economically resilient holdings and early recovery stocks in the construction sector we hope it should be well-placed for most foreseeable eventualities going forwards.