The unaudited net asset value of Athelney Trust was 289.1p at 30 September 2021.
Fund Manager’s comment for September 2021
The UK economy grew by 5.5% during the second quarter of 2021 while the current account deficit shrank to £8.6 billion as a result of a strong recovery in exports. Increases in overall inflation have raised expectations of sooner-than-expected tapering by both the Bank of England (BOE) and the US Federal Reserve. The BOE cited increased natural gas prices as an upside risk and said cost pressures are still elevated, even if likely to be transitory. For the moment, the BOE is holding monetary policy steady but has indicated that a modest tightening in policy would be needed at some point. Of the other G10 central banks, the Swedish and Swiss central banks also held policy steady, with no change likely from either in the foreseeable future. However, Norway’s central bank became the first central bank to raise interest rates, with a policy rate increase of 25 bps and signals of more to come.
China continues to dominate the financial media, albeit for the wrong reasons. Evergrande, one of China’s largest real estate developers, caused volatility in global financial markets due to concerns that the company could default on its debts. Given its sheer size and the importance of the real estate sector to China’s economy, an Evergrande default could weigh on China’s economy and possibly spill over into the prospects for the global economy. However, the direct exposure to Evergrande among western banks appears thus far to be negligible. Nevertheless, major disruptions in China, the world’s second largest economy, will certainly be felt in economies around the world.
Dividends declared by the companies in our portfolio continue to improve. However, a 4.6% decline in the market value of our investments as well as the payment in September of an interim dividend of 2p to shareholders has resulted in a 5.48% decline in the NAV per share. With the exception of the Fledgling index which increased by 1.08%, all the other indices declined during September. The AIM All Share Index declined by 3.8%, the Small Cap Index was down by 2.23% and, while the FTSE 100 decline by only 0.47%, the broader FTSE 250 Index declined by 4.44%. Overall, the global markets ended the month in negative territory, with the MSCI declining by 4.29% and the S&P 500 down by 4.76%.
During the month we sold down our holding in Mountview Estates while adding to our holding in Target Healthcare. Cash received by way of dividends was higher as compared to the same period last year resulting in a slight increase in the overall cash position which currently represents 3.2% of the portfolio value as at the end of September.
