1/27/2024 0 Comments Ik smalland![]() Through 2022 to date, the fund has seen bids for healthcare technology business EMIS from US-based UnitedHealth Group, a private equity approach for the B2B information services and data provider Euromoney and the previously mentioned purchase of private client manager Brewin Dolphin. There were also eight takeovers in the portfolio, with stocks such as John Laing and Marshall Motors leaving the portfolio, with six of these being private equity transactions, a theme that seems to be ongoing given the discrepancy of valuations in UK equities versus global peers, and the weight of cash available for investment in private equity funds. Through 2021, the fund participated in seven initial public offerings (IPOs) including private equity house Bridgepoint and card and gift retailer Moonpig. HSL’s investment process accentuates the long term, so portfolio turnover is relatively low with an average holding period of five years. The managers are benchmark aware and will look to find suitable opportunities here, although in these two sectors they acknowledge that by not holding some of the more leveraged and speculative companies in the index, performance could be adversely affected when commodity prices spike, as they have done recently. There can also be ESG factors that present an issue for some managers, and finally the constituents of the investable universe are quite different from the major oil and basic material producers such as Shell and BHP Group in the large-cap universe. Some of these companies do not lend themselves to consideration within the investment process (as described in the Investment process section on page 10) as cash flows and earnings are largely dependent on volatile commodity prices, which tend to be cyclical and difficult to predict. Note: Data to end January 2022.īasic materials (Exhibits 4 and 6) and energy have been a structural underweight in the portfolio. Technology is one of the largest relative overweight positions (Exhibits 4 and 5) Oxford Instruments has been a long-term position in semiconductor manufacturing, but there are also holdings in software and technology services via GB Group and Computacenter. Within financials, there are specialist lenders (OSB Group and Paragon Banking), niche and alternatives asset managers, such as ESG specialist Impax Asset Management and Gresham House with their higher-margin alternatives business and private client managers, Brewin Dolphin (which has agreed to a takeover bid from Royal Bank of Canada) and Rathbones. ![]() Within the consumer names there are again a wide range of types of companies, such as Watches of Switzerland (a primary play on demand for Rolex and other luxury watches), housebuilder Bellway and restaurant and pub group Mitchells & Butlers. This heterogeneous category includes a wide array of end users and industrial applications including longstanding positions in aerospace and defence company Ultra Electronics, engineering and construction business Balfour Beatty and business services company RWS Holdings. The single largest absolute and relative industry position is in industrials. Note: Numbers may not add up to 100 due to rounding. The broad UK equity market as at the end of May had a 21.9% weighting in financials, which is expected to benefit from rising interest rates, 20.0% in basic materials and energy, which have benefited from strong commodity prices, and only 1.3% in technology. ![]() The UK’s short-term outperformance can be attributed to the valuation support offered by UK equities relative to other regions (according to JHI, UK equities are trading at the widest discount to global equities in 25 years) and the mix of industries. The broad UK equity index has outperformed global markets, albeit still posting a negative return of c 4%, although UK smaller- and mid-sized companies have underperformed larger companies in this risk-off environment returning -18%, while AIM has lost around 26% in 2022 (Exhibit 1, all returns in pounds sterling, year to 26 June). So far in 2022, these concerns have seen global markets sell off by around 10%. ![]() Investors are preoccupied by the major themes of the war in Ukraine, rising inflation, the associated potential path for higher interest rates, and the Chinese government’s COVID-19 policies, which are all contributing to slowing global economic growth.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |