Fund Objective

This Fund aims to provide a total return primarily by way of growth in capital. There is a risk of fluctuations in capital values.

View on Past Performance

September saw unprecedented moves to prevent global systemic financial failure. US mortgage giants Fannie Mae and Freddie Mac were taken into conservatorship, effectively nationalisation, Lehman Brothers collapsed and a rescue bid came from Bank of America for Merrill Lynch. AIG was rescued with an $85bn loan from the Fed who became its 80% owner. The US's oldest money market fund Reserve Primary Fund "broke the buck" i.e. was worth less than $1.Lloyds TSB moved to acquire HBOS and the LSE imposed a ban on short selling of financial shares. A $700bn TARP (troubled asset rescue programme) of US banks was proposed to Congress. Mitsubishi UFJ injected $8.5bn into Morgan Stanley, acquiring a 20% stake. The remaining investment banks in the US (Goldman Sachs, Morgan Stanley) became regulated bank holding companies. Washington Mutual's assets were seized. Rejection of the TARP triggered widespread panic.Citigroup proposed a rescue bid for Wachovia. Bradford & Bingley's deposit base was bought by Santander and their mortgages nationalised. Fortis was rescued by a Benelux consortium, Hypo Real Estate was offered a lifeline by the German central bank, Glitnir Bank in Iceland was nationalised, Dexia was rescued by authorities in Belgium France and Luxemburg and the Irish government guaranteed 100% of Irish bank deposits.The fund dropped 6.9% last month, compared with a benchmark performance down 9.9%. UK equities, which fell by 13.4%, make up 75% of the benchmark. However, the fund itself is well diversified in different geographic areas and asset classes and this greatly helped to preserve capital within the fund in what was the worst month for UK equities since 1987.We made a number of changes to the portfolio last month. These arose from a re-assessment made by our fund advisors of the various fund investment styles. In some cases it was felt these did not represent the best way to achieve the expected returns from the fund, given the fund risk profile. These changes covered all asset classes within the core portfolio.

Fund Details