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Total Trust Assets
Source: The Bank of New York Mellon (International) Ltd as at 31.10.18
9. Includes private equity, mineral rights, funds, Liontrust Asset Management plc shares and other non-operating subsidiaries.
10. Cash quoted is centrally held cash. The equity portfolio may also hold cash as a result of trading by the underlying managers.
By Geography
Source: The Bank of New York Mellon (International) Ltd and MSCI Inc as at 31.10.18
By Sector
Source: The Bank of New York Mellon (International) Ltd as at 31.10.18
The view from our Investment Manager, 30 September 2018
Over the quarter, the Trust’s total shareholder return, Net Asset Value (NAV) total return and equity portfolio return were 3.9%, 4.8% and 4.6% respectively, against the MSCI ACWI which returned 5.7% over the same period. Since the beginning of 2018, the equity portfolio has returned -0.8% relative to the index. Whilst underperformance over any period is disappointing, the Trust’s performance relative to the index over the year-to-date is well within the range of outcomes we consider to be normal given the risk profile of the fund, and the need to take adequate risk to meet our long term objective of outperforming the index by 2.0% pa net of fees.
2018 has been a particularly challenging year for active managers. The median stock return was approximately 5.8% lower than the index, indicating that a lot of companies underperformed the index and only a small number outperformed. Furthermore, of that smaller proportion of outperforming stocks, we observe that many of the biggest contributors are in the very large cap (>$150bn) space. It is unusual for the market to be so dominated by a relatively small number of very large cap stocks, making it difficult for active managers that have a natural tendency not to crowd into large caps, preferring to exploit a broader opportunity set by investing across the market cap spectrum in search of the greatest long-term winners. However this tendency has, over the short-term, created headwinds against our portfolio.
During the third quarter, notable additions to the portfolio include Sulzer, a Swiss industrial engineering and manufacturing firm and Grandvision, an optical retailer with a number of well-known international subsidiaries. Notable sales from the portfolio were Scout24 and ALS Ltd. Towards the end of the quarter we made some small adjustments to our target manager allocations in order to adjust the balance of investment styles in the portfolio; our high level of conviction in all of the Trust’s equity managers remains unchanged.
Read our Investment Manager’s report for more on our portfolio’s performance over the past month.
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