Fund Objective

The Fund aims to provide consistent capital growth relative to the FTSE World North America Index (or such other index as may from time to time replace it) through investing primarily in North American companies.

View on Past Performance

In September, equity markets suffered their worst month of performance in over six years. The crisis in the financial sector was the main concern for investors: events included the bankruptcy of the 158-year old investment bank, Lehman Brothers, and government bailouts of mortgage lenders, Fannie Mae and Freddie Mac, and the world's largest insurer, AIG.Within our Fundamental strategy, we initiated a pair trade whereby we went overweight Keycorp and underweight Wells Fargo.This is a valuation play with Wells Fargo trading at a premium to Keycorp despite the companies have similar business fundamentals. Furthermore, we bought a basket of the nine largest market capitalised companies in the S&P 500 including Microsoft, JP Morgan, Exxon Mobil, IBM and Wal-Mart with the view that these names would outperform the general market given the attractive valuations and investors' flight to safety in the current volatile environment.Within our Event Strategy, our focus remained in the mergers and acquisitions book. With the increased market volatility, deal spreads had widened out to levels that presented attractive investment opportunities. Within the relative value strategy, we sold out of our media trade involving an overweight position in Time Warner and underweight positions in its subsidiary, Time Warner Cable, and in Walt Disney.The trade had worked well and we decided to take profits. Within the Liquidity strategy, we participated in the secondary offerings of Goldman Sachs and JP Morgan, both of which raised capital to bolster their balance sheets.

Future Expectations

The outlook for US equities remains uncertain as weak economic growth coupled with higher energy and food costs make it difficult for the Federal Reserve to engineer a recovery whilst taming inflation. Global growth is also at risk and could put further pressure on earnings growth.Despite the negatives, valuations are attractive and balance sheets outside of the financial sector are strong. This should limit the downside and allow the market to begin to price in an improving economic outlook as we look towards 2009.

Fund Details