Fund Objective

The Fund aims to achieve longterm capital growth.

View on Past Performance

The fund outperformed the index by 1.2% in August. Our defensive bias paid off in July, adding 1.25% from 5 defensive sectors. With many stocks having de-rated from high teens multiples towards low teens, and with input cost pressures beginning to alleviate, defensive shares are starting to defend. Inbev added 17bps, while similar contributions were made by Unilever, Ahold, Heineken, and Sanofi. The only real detraction from performance came from not owning UBS which rallied over the month.This detracted 17bps from performance. The only real change in strategy we have implemented over the last two months has been to shift any remaining industrial and commodity cyclical beta into consumer cyclical beta for the reasons outlined above. We have introduced stocks such as FIAT, PPR, Michelin, Electrolux, and Air France into the portfolio. These are not in large position sizes as we expect trading to remain tough for some time.Rather it is an expression of relative preference over highly valued commodity and industrial cyclicals where earnings are set to drop significantly over the coming two years.

Future Expectations

Gustav and Russian invasion of Georgia fail to halt a fundamental-led drop in the oil price. Growth in Europe and Asia weakens further as the low-rate policy of the US successfully transfers US recession to the rest of the world. Remain defensive but start the gentle process of introducing bombed out consumer stocks into the portfolio.

Fund Details