Fund Objective

The Fund'’s objective is to outperform the FTSE All-Share Index by 1% per annum over rolling three-year periods.

View on Past Performance

The Fund underperformed its benchmark over the second quarter. Incremental gains were attributable to underweight positioning in the mining and steel & other metals sectors, while stock selection in the leisure & hotels sector saw benefits gained from an overweight holding in InterContinental Hotels and the avoidance of Hilton Group. It was a similar story in information technology, where our overweight in iSoft Group was one of our best performing stocks. Unfortunately, ethical constraints did impact on performance. The beverages sector was a particularly strong performer on the back of the bid for Allied Domecq by Pernod. The tobacco sector also performed strongly.The Fund was also unable to benefit from the successful floatations of Party Gaming and Inmarsat. In a fairly quiet month for activity, transactions were based on stock specifics rather than any broader, top-down decisions.We continued to add to our position in British Airways - where strong management and cost cutting have complemented rising demand in an industry that shows good growth potential.

Future Expectations

Other buys included Cable & Wireless - where we look for significant margin growth following the company restructuring - niche real-estate company, Slough Estates, and Halfords, which is performing well in the very difficult retail environment.

Fund Details