Fund Objective

The objective of the Taylor Young Equity Income Fund is to generate and income yield before charges which is in excess of 110% of the yield of the FTSE All-Share Index, together with some capital growth.

View on Past Performance

Over the period, a decision was made to come away from holdings in Close Brothers, the diversified banking group and Royal Bank of Scotland, which had suffered considerably as a result of the continuing turmoil in international capital markets. Both of these holdings were sold at rather disappointing losses. Additionally, Experian, the credit checking business which was a former subsidiary of Great Universal Stores, was sold in its entirety at a marginal loss.It was pleasing to note some sound performance from such defensive stocks as Tesco, National Grid and Scottish & Southern Energy. Real Estate companies held up reasonably well as there was evidence of continuing foreign interest in the sector.On the other hand, it was disappointing to note poor performance from stocks such as Inchcape and SIG, two relatively newly introduced holdings, which suffered from adverse sentiment towards more cyclical companies. We are now looking to take a more positive view on fixed interest investments than previously, as we now expect global interest rates to fall.

Future Expectations

On a global perspective, economic conditions are likely now to get worse before they start to get better. The world's banking system is under significant strain and further casualties are almost certain, perhaps even of hitherto seemingly safe household names. The forced reduction in leverage throughout the hedge fund universe may also prove problematic.However, on a slightly brighter note, the fall in the oil price and the easing of inflationary influences should allow interest rates to fall in the developed world, and even China has embarked tentatively on a programme of monetary easing. Equity markets are certain to remain highly volatile in the short term but it is at times of fear and tension that the best investment opportunities emerge for patient, long-term investors in solidly-financed, well managed-companies.

Fund Details