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THE INVESTOR CENTRE
All information correct as at 30 September 2016
MANULIFE
Global Equity Income
Holdings in HSBC and PNC Financial
Services Group aided performance
Investors optimistic
towards global
equitymarkets
MAJEDIE
UK Growth
Joint manager: UK & General Progressive
Portfolio has outperformed thanks
largely to performance of banks
UKeconomic growth
looks uncertain ahead
of Brexit negotiations
MAJEDIE
UK Income
The life-insurance sector helped drive
portfolio performance during Q3
Uncertainty remains,
but economic news
has been encouraging
A ugust saw the Bank of England
announce a cut in interest rates
to 0.25% and a reduction in its growth
forecasts for 2017.This monetary
action, in response to the BoE’s unease
about future economic conditions,was
followed by more positive economic
readings:manufacturers reported a
rise in exports to their highest level in
two years.While there is plenty of
uncertainty as to the longer term impact
of Brexit, economic news since the
EU referendum has been encouraging.
The reporting of half-year results for
the life-insurance sector during Q3
dispelled much of the negative
sentiment it has faced.Holdings in the
portfolio gave tangible evidence of
improvement through strong cash
ows and impressive Solvency II ratios.
Consequently, this sector drove the
portfolio’s performance during Q3.
However, Pearson’s shares were
a ected by a competitor’s poor trading
update. Pearson has made signi cant
strides this year in rationalising its
business and we retain our conviction
in the company; its overseas earnings
make it attractive too.After changes
pre- and post-Brexit,we are broadly
happy with the portfolio as the range
of macro outcomes is ever broadening.
Investors were optimistic towards
global equity markets over the
quarter, given signs that the eurozone
economy remained relatively strong,
despite the UK’s vote to leave the EU.
US employment gures were
positive, while Japan expanded its
monetary stimulus plan. Emerging
markets equities continued their
recent trend of outperforming those
of developed markets.
Stock selection in industrials and an
underweight position in utilities
contributed to performance. Individual
contributors included HSBCHoldings,
PNC Financial Services Group and
Koninklijke (Royal) Philips Electronics.
Stock selection in the healthcare
sector and an overweight position
in consumer staples detracted
from initiated a
position inTaiwan Semiconductor
Manufacturing Company in light of
its scale, technology leadership and
relatively low unit sold our
position in Qualcomm.
We believe the fund’s holdings
combine qualitative and valuation
attributes that should allow them to
successfully navigate any further
periods of nancial market volatility.
T here are plenty of issues at home
and in the global economy that
markets have to deal with over the
short to medium term:UK economic
growth looks uncertain (particularly
given Brexit negotiations are only just
beginning),US GDP likewise, the
increasingly unstable political situation
in Europe, and monetary policy seems
to be running out of steam.The timing
of these problems coming to a head is
hard to predict, so we have tilted the
portfolioonto amore defensive footing.
The portfolios have outperformed
the broader market during the quarter,
driven chie y by banks, both domestic
andmore global.This sector has re-rated
as investors have identi ed structural
improvements on attractive valuations.
Some of our much-treasured mid-caps
have also performed well, bene ting
frombuoyant trading updates;Rentokil,
Hays and Electrocomponents are all
examples of UK listed mid-caps that
operate overseas and are not therefore
dependent on the UK economy.
Detractors have been oil stocks (we
remain in the higher-for-longer camp)
and UK food retail, although both
Tesco andMorrisons have announced
encouraging sales momentum and
revenue improvement.
Richard Staveley, James de Uphaugh,
Matthew Smith and Chris Field Chris Reid Paul Boyne and Doug McGraw
36 | THE INVESTOR