The sharp rise in market volatility that started in September carried over into October, as further turmoil in the global financial system fed through into continued equity market losses. In the UK, economic news continued to point to a recession, with indicators such as retail spending and housing remaining weak. Third quarter GDP came in at -0.5%. Early in the month the Bank of England cut interest rates by 0.5% to 4.5%, in a coordinated move with other major central banks.This was followed by the announcement of a bank bailout package hat would see the Government take stakes in UK banks whilst also providing extra liquidity to the money markets. The FTSE All-Share index fell by 11.9% over the month, with mid and small cap stocks hit particularly hard. Oil & gas and Pharmaceuticals were the best performing sectors, while autos and industrial metals were the worst, although in the larger sectors, banks, life assurance and mining all recorded significant falls.Activity was relatively muted over the month; we trimmed holdings in Capita and Mitie after decent performance, and also cut BT ahead of cautious guidance, which hit performance. Mining stocks were negatvie for the Fund as well, but we retain holdings in Eurasian Natural Resources and XStrata as the market appears to have priced in an overly negative outlook for the sector.
50.20p
