The investment objective of this fund is to provide an above average income, together with prospects of capital appreciation over the longer term, derived mainly from a portfolio of securities in UK companies. The Halifax High Income Life and Pension funds invest directly into the Halifax UK Equity Income OEIC.
The sharp rise in market volatility that started in September carried over into October, as further turmoil in the global financial system fed through into continued equity market losses. In the UK, economic news continued to point to a recession, with indicators such as retail spending and housing remaining weak. Third quarter GDP came in at -0.5%. Early in the month the Bank of England cut interest rates by 0.5% to 4.5%, in a coordinated move with other major central banks.This was followed by the announcement of a bank bailout package hat would see the Government take stakes in UK banks whilst also providing extra liquidity to the money markets. The FTSE All-Share index fell by 11.9% over the month, with mid and small cap stocks hit particularly hard. Oil & gas and Pharmaceuticals were the best performing sectors, while autos and industrial metals were the worst, although in the larger sectors, banks, life assurance and mining all recorded significant falls.The high cash weighting has been helpful over the past two months, and we added to a number of favoured stocks on price weakness. The portfolio retains a focus on large cap stocks - which has also been helpful for performance. We also remain underweight in cyclical stocks, and have a bias towards international companies that are benefiting from US dollar strength.
