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THE INVESTOR
THE INVESTOR CENTRE
All information correct as at 30 June 2015
T
he portfolio
outperformed a rising
market during the quarter.The UK
general election result was seemingly well
received by UK plc, but clouds in the form
of current account and budget de cits
are lurking on the horizon. Elsewhere,
brinkmanship is being utilised in Europe
and data from the US is showing signs of
being late cycle.All this ensures that we
are conscious of the need to position the
portfolio with an eye to protection.The key
performance driver during the quarter was
small cap positions: an integral part of the
portfolio. Being more domestically focused
than their larger, more internationally
exposed peers, smaller companies have
bene ted from the post-election rally:
businesses exposed to the housing market
(MortgageAdvice Bureau) and those that
would have su ered under a less business-
friendly government (Sta ine) did
particularly well. Elsewhere, the position
inVodafone did well, with speculation of a
tie-up with Liberty Global stoking the share
price.As always, it was not all plain sailing:
positions in BP and RioTinto struggled
as the US dollar rallied.We continue to
favour the UK banking sector, but we have
also been reducing our underweight in the
mining sector, where we feel, selectively,
that valuations now o er an attractive risk/
reward ratio.
MAJEDIE
UK Growth
Joint manager: UK & General Progressive
Small caps perform well, but
protection remains a focus
BP andRioTinto
struggled as theUS
dollar rallied
Richard Staveley, James de Uphaugh,
Matthew Smith and Chris Field
G
lobal market performance was modestly
positive over the quarter. In the US,
the Federal Reserve Board said it would have
to see more encouraging economic data
before it considers raising interest rates. Oil
prices rose inApril, based on reports that
production could be levelling o while global
demand may be picking up. Europe bene ted
from a healthier outlook on its economy.
Japanese equity markets continued to rise
on signs of improved consumer spending
and a reduced threat of de ation. Stock
selection within the consumer staples and
nancials sectors contributed to the strategy’s
performance, while stock selection within
the consumer discretionary and healthcare
sectors detracted from performance.As
interest rates are at historic lows and bonds
appear overpriced, we continue to favour
equities.The US continues to outperform,
but we believe the market appears expensive,
especially against a backdrop of high margins.
In Europe, we will continue to focus on
companies with international operations and
favourable equity valuations, as we believe
these companies will bene t from a weaker
euro.We remain selective in our Japanese
exposure, focusing on leading companies
with strong management teams and cash
ows.The strategy does not have any direct
exposure to emerging markets, as we are
concerned about their commodity exposure,
overly tight monetary policies and potentially
weakening currencies.
MANULIFE
Global Equity Income
Market conditions mean equities
are still a favoured investment
Europe bene ted from
a healthier outlook on
its economy
M
ay’s general election result brought
a Conservative majority victory, and
with it a clearer eld of view in UK politics
for the next ve years (with the exception
of the vote on Europe, which is not until
around 2017), which we believe will help to
reduce uncertainty in the market at a stock-
speci c level.
In terms of fund performance, last
month we gave back some of the rst
quarter’s relative performance with share
price weakness from easyJet,Man Group
and Pearson.We have reviewed all of these
holdings and our conviction remains. On the
positive side QinetiQ, HollySys, Playtech and
Cairn Energy all did well over the quarter, as
did avoiding the likes of GlaxoSmithKline and
Shell; the potential business model problems
in these large companies are becoming more
apparent to the wider market.
Looking forward, the fund has a healthy
yield and we believe there is a supportive
environment for companies to improve their
competitive position through operational
measures.We remain nervous about the oil
price, with a recent trip to a shale conference
in the US recon rming our views.We
have also sold around half of our UK retail
exposure – following the subsector’s strong
run – and switched it into two UK banks,
RBS and Lloyds.
MAJEDIE
UK Income
Confidence remains, despite setback
on easyJet, Man Group and Pearson
There is a supportive
environment for
companies to improve
Chris Reid
Paul Boyne and Doug McGraw
