Fund Objective

The aim is for investment performance to be consistently above the average of the IMA Balanced Managed Sector for periods of up to one year, and to be in the top quartile for all longer periods of three years and more.

View on Past Performance

Major stock markets performed well despite the bond sell off in June.Healthy corporate earnings growth was seen across most regions.Stock markets posted a small gain over the quarter, with most of the positive performance occurring in April as sentiment rebounded sharply from February's housing market worries. Energy stocks performed strongly as the oil price rallied through $70 while materials companies moved significantly higher as emerging market growth remained strong.Interest rate sensitive sectors such as utilities underperformed as 10 year US treasury yields hit a peak of almost 5.4% in mid June. Financials also underperformed as credit worries returned to the fore. Consumer discretionary stocks lagged the market with ongoing weakness in North America - US consumers are feeling the pinch as mortgages re-set to higher interest rates.The strong performance of major equity markets saw the equity portion of the Fund reaching its upper limit. As a result we took some profits in across the equity portfolios.The Global Advantage Fund returned 3.21% during the quarter, compared with the sector average return of 2.65%. This strong performance saw the Fund finish the quarter ahead of its IMA sector average on the back of careful stock selection and asset allocation.

Future Expectations

We remain focused on company fundamentals, looking for cases where we can be nonconsensus about material aspects of a company's future performance.We remain concerned that US consumer spending will come under pressure due to higher mortgage rates. We are, therefore, keen to avoid producers of 'large ticket' items such as cars and TVs sold into the US, unless we have a strong, stock specific reason for liking a company.Although many of our preferred stocks traded lower during the market volatility, we remain broadly comfortable with companies exposed to industrial capital spending, particularly in emerging markets.

Fund Details