To achieve a positive capital return, over the long term, regardless of market conditions, through investment and disinvestment (directly and indirectly) in a portfolio predominantly consisting of UK equities, related derivative contracts, money market instruments, cash, near cash and deposits.
We began the month with a net market exposure of 62.7% but increased that exposure to 71% by the end of August. Equities now look cheap, both against historic standards and against other asset classes. We expect valuations to recover, although the market may well trade around current levels for some time. We believe that recovery, when it comes, could be swift and recognise the need to be positioned to take advantage of a rebound in the market.In the interim, we accept that this increased exposure to the market may lead to higher volatility, a price we believe is worth paying for the upside potential in markets. At the stock specific level, the largest positive impacts on performance during August were FirstGroup (buoyed by the falling oil price) and Friends Provident. As the mining stocks gave up some of their previous gains, the holding in Xstrata was the largest detractor from performance.
