The unaudited net asset value of Athelney Trust was 294.1p at 31 October 2021.

Fund Manager’s comment for October 2021

As predicted in last month commentary, the Chinese economy was clearly disrupted by the renewed COVID outbreak and the potential collapse of Evergrande with a reported quarter-on-quarter GDP growth rate of only 0.2% in Q3, as compared to a 1.2% increase in Q2, and pre-COVID levels of 1.5%. By comparison, 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. In the recent budget speech, it was highlighted that the post pandemic recovery has been faster than expected with GDP growth for this year revised upwards to 6.5% from 4%.

Lingering supply chain issues, rising prices and still-strong consumer demand continues to provide a positive impetus to the economic data. Increases in overall inflation have raised expectations of 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. The European Central Bank (ECB) kept monetary policy unchanged at its October meeting, expecting inflationary pressure to ease over the course of 2022. Eurozone Q3 GDP rose 2.2% quarter over quarter, close to forecast and similar to growth seen in Q2.

The market value of our investments increased by 1.81% in October and, after paying expenses, the NAV per share increased by 1.72%.  This compares with a 2.13% increase in the FTSE 100 index and a 0.33% increase in the broader FTSE 250 index. The Fledgling Index increased by 0.44% while both the Small Cap Index and the AIM All-Share Index declined during the month by 0.53% and 1.66% respectively.   Overall, the global markets performed much better with the MSCI ending the month up by 5.59% on the back of strong US stock market performance.  The broad S&P 500 index was up by 6.91% over the month.

There were no changes to the portfolio during the month and the overall cash position as at the end of October currently represents 3.0% of the portfolio value.