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.

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February

The COVID-19 coronavirus hammered financial markets in February as worsening outbreaks of the virus in South Korea, Japan (where schools have been closed) and in northern Italy drove market volatility to the highest level since December 2018. The surge in new cases of the virus led to further concerns as to the impact of the outbreak on global growth due to disruptions to supply chains and the restrictions to the movement of people, goods and the provision of services around the globe. Perhaps the most important recent economic data point is China’s Manufacturing Purchasing Managers’ Index (PMI) for February which came in at 40 — the lowest reading since the survey was launched in early 2004. The major world markets as represented by the MSCI World Index and the S&P 500, continued the decline which commenced in January 2020, with both these indices falling in February by 8.59% and 8.41% respectively. The UK, European and Asian markets were also weaker. In the UK, the FTSE 100 was down by 9.88% in local currency terms as were the other indices that we monitor, namely the Small Cap Index which declined by 8.67%, the AIM All Share Index which was down by 8.21% and the Fledgling Index which was down by 10.36%.

While our portfolio of investments declined in similar fashion to that of the overall market, it performed a little better, declining by 8.53% during the month which, after allowing for the write back of over provided expenses in January, resulted in a similar decline of 8.53% in the NAV. We did not trade during the month and received cash from the take-over of Hansteen Holdings which was finalised during the month. Cash currently comprises 6.6% of the portfolio.

January

Coronavirus, a new virus which originated in China, has spread across Asia and into most of the major economies around the world, sparking fears of a major outbreak similar to the SARS epidemic that plagued China and Asia in the early 2000s. However, any short-term economic impact is likely to be short lived and limited to the economies of China and East Asia. Recent economic data shows that in the US, Q4 real GDP grew by 2.1% on an annualised basis, in part due to a boost from net exports. Year-on-year, real GDP is up 2.3% prompting the Fed to leave the target range for the federal funds rate unchanged. A similar stance was adopted by the Bank of England which also opted to keep policy rates unchanged. Chinese GDP growth held steady in the fourth quarter with data on December activity exceeding expectations, providing early indications of a stabilising Chinese economy. The major world markets as represented by the MSCI World Index and the S&P 500 broke their upward trend in January with both these indices declining by 0.68% and 0.16% respectively. The UK, European and Asian markets were also weaker. In the UK, the FTSE was down by 3.40% in local currency terms as were the other indices that we monitor, namely the Small Cap Index which declined by 0.92%, the AIM All Share Index which was down by 0.95% and the Fledgling Index which was down by only 0.46%. Our portfolio of investments performed much better than the overall market, increasing by 1.59% during the month which, after allowing for expenses resulted in a 1.51% improvement in the NAV. We sold our holding in Vitec, Camellia and Andrews Sykes, utilising the proceeds and some of our surplus cash to add to our position in Homeserve and 4Imprint. Cash currently comprises 5.1% of the portfolio.

Copyright Athelney Trust. Site updated 24/03/2020