Fund Manager's Comments

A collection of the Fund Manager's comments and Chairman's Statements. These are extracted from the original Portfolio Details and Accounts that are published on this website.

Please feel free to share with friends and colleagues on social media.

May

The strong start to the year came to an end as the US announced that it would be moving ahead with tariff increases on US imports from China. China responded in like fashion which caused world equity markets to soften during the month. The MSCI World Index, Asia ex-Japan, emerging markets and the S&P 500 all losing more than 6% in USD. US Treasury yields fell, with the markets now pricing in more than three US Federal Reserve (Fed) rate cuts by the end of 2020. The portfolio performed well during the month in spite of the international and domestic political turmoil with the Prime Minister announcing that she is stepping down on 7 June and the various factions in parliament refusing to back her BREXIT deal. After accounting for expenses, the net affect was an increase in the NAV, up by 0.04% as compared to the FTSE Index which declined by 3.5%, the Small Cap Index which was down by 2.1%, the AIM All Share Index down by 1.7% and the Fledging Index down by 0.4%. During the month we continued to consolidate our exposure in the Property sector, which is now down to eleven names. Dividends received in the month continue to be as expected and, in some cases, better than expected. We have turned our attention to the other sectors in the portfolio where our focus will be to retain and consolidate our holdings into those quality companies in the portfolio which are unlikely to be disinter-mediated by technological change and able to maintain or increase their dividend over the next five years. To this end, we will continue to sell our holdings in companies where there has been a change to the industry structure, the business model, the senior management team or the product/service offering, as well as adding companies which have an acceptable level of predictable growth in the business’s medium-term economic performance. Our position in Samuel Heath was lightened while Air Partner, Charles Taylor, Epwin, James Fisher, Goodwin, Hostelworld, Harworth, Ibstock, Ocean Wilsons, River and Mercantile, Schroder Real Estate and Town Centre were sold. We added to our position in Hill & Smith, Custodian REIT, LondonMetric, Regional REIT and Tritax Big Box, with Gamma Communications, Liontrust Asset Management and National Grid included for the first time.

April

Global markets continued their strong start to the year with most regions up during April. U.S. equities continued to perform well with the S&P 500 Index advancing by 3.9% as the Fed kept rates on hold during the first quarter and indicated that there would probably be no further rate increases for the remainder of the year. Europe on the other hand released a series of disappointing Eurozone metrics, signalling a lacklustre start to the second quarter. Consumer confidence continued to drift lower, and Germany’s closely watched LFO business climate indicator fell for the seventh time in the past eight months. In China, the government’s wide range of stimulus measures seemed to be bearing fruit, evidenced by better-than-anticipated first-quarter GDP growth (+6.4%), retail sales (+8.7%) and industrial production (+8.5%).
Following the April 10 agreement between the European Union and the U.K. the fear of government dysfunction around the world abated with the delay of Brexit until Halloween. The portfolio performed well during the month, given the continued political uncertainty, with the NAV increasing by 5.2% as compared to the FTSE Index which increased by 1.9%. The Small Cap Index was up by 3.8%, the AIM All Share Index by 6.1% and the Fledging Index by 1.7%. During the month we consolidated our exposure in the Property sector into fourteen companies with a further three to be removed once they have gone ex-dividend. Dividends received in the month continue to be as expected and, in some cases, better than expected. We will now turn our attention to the other sectors where our focus will be to retain and consolidate our holdings into those quality companies in the portfolio which are unlikely to be disinter-mediated by technological change and able to maintain or increase their dividend. To this end we will continue to sell our holdings in companies where there has been a change to the industry structure, the business model, the senior management team or the product/service offering, as well as adding companies which have an acceptable level of predictable growth in the business’s medium-term economic performance. Our position in Air Partner was lightened while McColls Retail, Wynnstay Group, TP ICAP, Capital & Regional, Schroder European. Trust, Palace Capital and Park Group were sold. We added to our positions in AEW, Lok’n Store, Tritax Big Box, London Metric and Regional REIT. No new names were added.

March

Global markets continued their strong start to the year with most regions up during the month of March. There has been a shift towards defensive and yield-related sectors while cyclicals and financials have come under pressure. The US continued its strong run with the S&P 500 index up 1.8% and the Nasdaq Composite up 2.6%. While equity markets were relatively strong, most of the action was in the debt markets. On 19 March, the US 10-year Treasury note fell below the 3-month Treasury yield. 10-year yields fell to their lowest levels since January 2018 to 2.4%. Dovish comments from the Fed and a moderation in global activity helped drive a fall in longer-term yields. Other global markets were up but not to the same extent reflecting medium to longer-term concerns about European economic growth. The FTSE was up 2.9% which was reasonable given the uncertainty related to Brexit and the inability of the UK parliament to come up with an agreed solution to leave the EU. Asian markets were strong with China leading the way with one of the strongest performances recorded in March. The Shanghai Comp was up 4.8% in USD terms and the Hang Seng was up 1.5%. While the investment portfolio declined only slightly (by 0.1%) during the month, Athelney shares went ex-div on 21 March which resulted in the NAV declining by 4.8% as compared with the Small Cap Index which increased by 0.8%, the AIM All Share Index which increased by 0.6% and the Fledging Index which declined by 11.3%. Dividends received in the month continue to be as expected. Our focus remains on retaining and consolidating our holdings into those quality companies in the portfolio which are unlikely to be disinter-mediated by technological change and able to maintain or increase their dividend, as well as adding companies which have an acceptable level of predictable growth in the business’s medium-term economic performance. To this end we have continued to sell our holdings in companies where there has been a change to the industry structure, the business model, the senior management team or the product/service offering, the occurrence of which will result, in our view, in a deterioration in future profitability and hence dividends. Our positions in XLMedia, Quarto and Hansard Global were sold. No new positions were added.

February

As stated last month, the trade and political outlook for 2019 remains unclear. President Trump has walked away from a de-nuclearisation deal with North Korea, a trade deal with China is still in the balance and it does not appear that the Prime Minister has a Brexit proposal that is acceptable to Parliament. However, after an excellent start to the year, equity markets have discarded all of the political noise and continued to power ahead. Most major stock markets around the world were up during the month of January. The Dow Jones Index increased in US$ by 3.67% and there was a 2.83% increase in the MSCI World Index during the month. In similar vein, it is pleasing to report that during February the Athelney Trust unaudited NAV increased for the second month in a row, this time by 1.07%, which compares with a 1.52% increase in the FTSE Index, a 0.88% decline in the AIM All Share index and a 0.9% increase in the Small Cap Index.
Dividends received in the month continue to be as expected and our focus remains on retaining and consolidating our holdings into those quality companies in the portfolio which are unlikely to be dis-intermediated by technological change and able to maintain or increase their dividend, as well as adding companies which have an acceptable level of predictable growth in the business’s medium-term economic performance. To this end we have continued to sell our holdings in companies where there has been a change to the industry structure, the business model, the senior management team or the product/service offering, the occurrence of which will result in our view in a deterioration in future profitability and hence dividends. Our positions in Braemar Shipping, Reach, Gattaca, PRS REIT, KCOM and Kin & Carta have been sold while we consolidated our positions by adding to our holdings in Rightmove, Close Brothers and Murgitroyd. We took up the offer in Tritax Big Box, Greencore and Randall & Quilter.

January

It is pleasing to report that the Athelney Trust unaudited NAV increased by 3.27% during January, which compares with a 3.58% increase in the FTSE Index, a 7.01% increase in the AIM All Share index and a 2.29% increase in the Small Cap Index. Most other major stock markets around the world were also up during the month of January. The Dow Jones Index increased in US$ by 7.17% and there was a 7.68% increase in the MSCI World Index during the month.

We are now into the second month of the 2019 year and the trade and political outlook for 2019 is no clearer. What is clear however, is that the US Federal Reserve has decided to relax its stance on interest rate hikes and keep interest rates steady, in the 2.25% to 2.5% range for the foreseeable future. This means that the central bank is unlikely to raise borrowing costs any time soon, providing some stimulus to the market as evidenced during the past month.

Our focus is on retaining and consolidating our holdings into those quality companies in the portfolio which are unlikely to be disintermediated by technological change and able to maintain or increase their dividend, as well as adding companies which have an acceptable level of predictable growth in the business’s medium-term economic performance. To this end we have continued to sell our holdings in companies where there has been a change to the industry structure, the business model, the senior management team or the product/service offering, the occurrence of which will result in our view in a deterioration in future profitability and hence dividends to Athelney Trust Plc. Our positions in F&C UK Real Estate have been sold while we added to our holdings in the AEW UK REIT.

Copyright Athelney Trust. Site updated 17/06/2019