OUR PORTFOLIO

The view from our Investment Manager, 30 June 2018

Over the quarter, the Trust’s total shareholder return, Net Asset Value (NAV) total return and equity portfolio return were 7.5%, 7.2% and 6.9% respectively, against the MSCI All Country World Index (ACWI), which returned 7.1% over the same period. Despite the portfolio just slightly underperforming the MSCI ACWI during this period, the equity portfolio has outperformed the benchmark since the start of the year by 0.6%.

Following the market correction in the first quarter, the second quarter started with equity markets posting positive returns encouraged by higher-than-expected earnings. However, global equity markets were volatile, as geopolitical risks continued to dominate headlines throughout April. In May, US stocks led global equity markets despite persistent fears of a trade war, with the MSCI US index outperforming the ACWI by approximately 2.3% in sterling terms. The Trust’s underweight to the US was a detractor to performance during this period.

The Federal Reserve increased interest rates for the second time this year in June, putting increasing pressure on Emerging Market countries with large current account deficits. As a result, the portfolio’s underweight position to Asia and Emerging Markets was a contributor to the outperformance of the Trust in June.

From a sector perspective, technology stocks continued their run of healthy returns, generating significant positive contributions to the Trust’s returns over the quarter.

During this period, the biggest addition to the portfolio was a position in Equinix, a US-based data centre provider, whereas the biggest sales were positions in Booking Holdings and Sberbank.

Since our appointment on 1 April 2017, the Trust’s equity portfolio has returned 12.9%, outperforming the MSCI ACWI by 2.8%. It is pleasing to see that the majority of outperformance since our appointment and implementation of the new investment approach can be attributed to stock selection. Our approach to portfolio construction has allowed performance to be driven by the equity managers’ stock-picking capabilities, and not swayed by any individual factor or regional bets.

Going forward, we expect the increased levels of volatility and dispersion that we have witnessed over the recent months to persist, providing opportunities for active stock pickers like the managers within the Trust. There were no changes to the manager line-up or target allocations this quarter.

Read our Investment Manager’s report for more on our portfolio’s performance over the past month.