The fund returned -10.0% in the third quarter.The quarter began with a rally and a belief that the worst effects of the credit crunch were over. This proved to be premature when in September, a series of major financial institutions went into administration, were bought by competitors in a rescue deal or were effectively nationalised. The end of the month saw authorities step in: a temporary ban on shorting financial stocks and a pledge by the US to inject USD 700bn into the financial system.Over the quarter the MSCI World index was down 15.2% in US dollar terms and all other major stock markets were in the red. Sectors that held up well over the quarter were the traditional defensives, including healthcare and consumer staples. Commodity related sectors sold off at the beginning of the quarter as the oil price came off and finished the quarter as the weakest performing sector.Over the course of the quarter, we sold the remainder of the position in JO Hambro UK Growth and added the Schroder UK Alpha Plus fund. In the current market environment, we think it prudent to stick with the high conviction, core positions. The managers in the Trust are well positioned to ride out the current market turmoil.
