Fund Objective

The Fund seeks to achieve capital growth.

View on Past Performance

European markets rose 4% in August, making the year-to-date return -10.4%. The Fund underperformed the index over the month. The funds performance was impacted by weakness in Swiss Life, which disappointed the market by buying a stake in MLP, rather than returning cash to shareholders. The rebound in the performance of UBS & AXA which the fund doesn't own and the high cash balance was a drag on performance.During the month activity on the fund was kept at a minimum as I thought it was well positioned for a declining economic activity, being overweight the more Defensive sectors. The indicators of economic activity did indeed deteriorate over the month but the Healthcare and Telecommunications sectors marginally underperformed.

Future Expectations

I continue to maintain a defensive stance as I feel that the Cyclical sectors of the market do not reflect the economic scenario that the world is entering. Sell side analysts still continue to forecast further margin and profit expansion into 2009, when European companies are facing the headwinds of major currency appreciation, rising labour costs, rising raw material costs, rising energy costs, declining availability of credit and a slowing of economic growth across the globe.I am looking to see improved performance from the defensive sectors of Healthcare and Telecommunications stocks as market participants return from their summer breaks and re-evaluate the economic situation. Unfortunately I see little upside for the markets until sell-side analysts get more realistic in their profit expectations and these become factored in.

Fund Details