Fund Objective

To provide capital growth and income.

View on Past Performance

Markets experienced a sharp sell-off in September, with severe dislocation in credit markets having a significant impact on the financial sector. Short-term liquidity in the wholesale market became extremely scarce, causing Lehman Brothers to file for Chapter 11 bankruptcy and a number of other large financial institutions to be bailed out by government actions including AIG, Washington Mutual, Fortis, HBOS and Bradford & Bingley.The severity of the situation caused market regulators in a number of regions to ban the short selling of financial stocks. The US government also announced its intention to set up a $700bn fund ('TARP') to buy troubled assets from banks, in order to inject confidence back into money markets. All UK indices fell sharply, with the FTSE 100 falling 12.9%, FTSE 250 down 15.6% and small-cap stocks down 14.5%.

Future Expectations

Government actions taken to improve confidence in the banking sector should hopefully begin the process of improving short-term liquidity in the money markets. However, this will take time and attention will now turn to the state of the real economy as banks start to deleverage. Against this backdrop, we continue to believe that a more cautious approach is needed and reaffirm our preference for stocks with strong balance sheets and robust cash flows.

Fund Details