Price and Performance

For the month of June, the Trust’s total shareholder return, NAV total return and equity portfolio returned 6.1%, 6.3% and 6.2% respectively, outperforming the benchmark MSCI All Country World Index (ACWI) which returned 5.6% over the same period.

Most developed equity markets rallied in June, a reversal of weaker performance observed in May. Strong market returns reflected investors’ expectations of further monetary stimulus, following indications from both the US Federal Reserve and European Central Bank that expansionary policy could be on the horizon. Additionally, a truce struck between the US and China on the side-lines of the G20 summit that there would be no immediate further escalation of the ongoing trade dispute provided further comfort to investors and contributed to market performance over the period.

With regard to changes in the Trust’s portfolio, a new position was established in Capita, the UK’s largest Business Process Outsourcing company with an estimated market share of nearly 30%, split between public and private sectors. Whilst Capita has experienced distress in recent times, notably issuing a profits warning shortly after the collapse of rival Carillion in January 2018, in the manager’s view the company is now starting to see benefits from wide ranging changes introduced by CEO Jonathan Lewis following his appointment in December 2017, and represents an attractive opportunity at a suppressed valuation. Planned cost reductions are progressing ahead of schedule and management hold a bullish outlook for the company’s future free cash flows and operating margins. Other trading activity during June included the liquidation of the Trust’s position in Exxon Mobil, which in the view of the manager is now trading at a lower discount to intrinsic value, with proceeds invested in more attractive opportunities elsewhere.