39 / 44
THE INVESTOR CENTRE
SCHRODERS
Managed Growth
Schroder Managed
Anglo American, South32 and Home
Retail Group all performed strongly
Mining sector positions
performedwell after
reassuring results
STEWART INVESTORS
Global Emerging Markets
AngloGold Ashanti, Unilever and
Bank Pekao perform strongly
SELECT EQUITY
Joint manager: Worldwide Managed
and Worldwide Opportunities
Managers remain bullish on US
consumer despite strong dollar
Mining companies
rallywell following
weak period
Expect to see a period
of significantly
heighteneduncertainty
T
he fund has benefited from
positions inAngloGoldAshanti
(SouthAfrica: materials), which
climbed as mining companies rallied
strongly after a period of weakness,
and Unilever (UK: consumer staples)
which rose as the company’s self-
styled‘glocal’ portfolio of products
performed well. Bank Pekao (Poland:
financials) gained as it retained its
strong capital position, allowing it
to continue to pay out a respectable
dividend, while Unicharm (Japan:
consumer staples) rose as domestic
Japan remained resilient despite
strong competition inAsia.
On the negative side,Tech
Mahindra (India: information
technology) declined as some of the
segments the company operates in
are experiencing a difficult time;
and Housing Development Finance
(India: financials) was weak with
the Indian market.Tiger Brands
(SouthAfrica: consumer staples) was
negatively influenced by a difficult
domestic operating environment
and the decision not to recapitalise
their poorly performing Nigerian
investment.
T
he fund’s UK equity portfolio
outperformed the FTSEAll-
Share Index and mining.The
fund’s mining sector positions
performed particularly well after
reassuring results.
AngloAmerican’s coal, iron ore
and nickel divestment plans were
well received, as investors looked
past its (pre-announced) decision
to abandon the final dividend.
Meanwhile South32, predominantly
a base metal miner, enjoyed a
recovery as the market welcomed
the cost-cutting measures unveiled
alongside its half-year results.
Home Retail Group, owner
ofArgos, was another strong
performer after receiving bids from
SouthAfrican retailer Steinhoff
International and J Sainsbury.
On the negative side, our banking
positions performed poorly – Royal
Bank of Scotland revealed its eighth
consecutive year of annual losses;
meanwhile, Barclays published
disappointing fourth-quarter results,
including a 50% reduction in the
dividend over the next two years
and the divestment of itsAfrican
business in order to protect its
capital position.
F
or the first time since June 2006,
and after seven years of a zero
interest rate policy, the US Federal
Reserve has finally raised interest rates.
As we’ve opined before, sustained zero
rates allow companies that should have
gone bankrupt to survive, remove the
rationing mechanism to investment
(resulting in excessive capacity and
risking years of subsequent deflation)
and encourage dubious financial
engineering (fromUSD-funded carry
trades to debt-financed share buybacks).
This‘medicine’ powered asset prices
higher but created little real value.After
such a prolonged distortion in the price
of money,we would expect a period
of significantly heightened uncertainty,
even assuming a benign macro and
geopolitical backdrop. Unfortunately,
conditions are hardly benign.
We remain bullish on the US
consumer despite dollar strength,
weak global GDP and deteriorated
energy fundamentals. Pockets of
strength outside the US (such as in
Europe and Japan) are largely the
result of unorthodox and unsustainable
monetary policies.
Against this backdrop,we continue
to look for businesses capable of
making their own luck.
Kevin Murphy and Nick Kirrage
George Loening and Chad Clark
Jonathan Asante
THE INVESTOR
|
39