Fund Objective

To provide long-term capital growth and income.

View on Past Performance

UK equity indices underperformed most of their developed cousins in September,with the FTSE All-Share up 1.9% in sterling terms.Placing the main drag on the UK market during the month was its heavy weighting in banks.The sector fell 2.3% after incurring short-term earnings hits from losses in the credit markets and following Bank of England's emergency bailout of mortgage lender Northern Rock.However recovering global equity markets returned a solid 4.0% in September,after the Federal Reserve's surprisingly aggresive rate cut injected a much needed dose of confidence into the market.The Fed's decision to loosen monetary policy has made a US recession much less likely.Long-date government bonds,the main beneficiary of this summer's financial market turbulence,fell back sharply over the month,as investors rediscovered their appetite for risk.Furthermore,the interest-rate differential between government and corporate debt also fell as risk-aversion receded.The FT (Gilt)All-Stocks index moved sideways in September,while the FT (Gilt)Long index returned -1.2%.

Future Expectations

On balance,we believe the outlook for shares is positive,hence our modest overweight with respect to equities.However,Morley continues to target a bias towards fixed income as bonds are the best way to hedge against a possible recession.

Fund Details