A complete listing of all stocks held by the fund at its most recent reporting date can be found here.
Summary of investment activities to 31st December 2017
The fund’s financial year end has now changed to 28th February. Investors will receive a report on the extended period of fourteen months in April.
In the six months since the last interim report, the price of units in the fund at 31st December 2017 has risen 1% to £26.832. Gains in equity markets were largely offset by falls in bond prices and weakness in the US dollar exchange rate.
Despite recent market volatility, the state of the world economy is reasonably encouraging. Equity markets should draw some support from rising corporate profits, even if stocks already appear to discount those gains. Fixed rate bonds may be vulnerable to any pick-up in inflation and rising interest rates. The portfolio remains relatively cautiously positioned and well diversified, including some exposure to gold.
The state of the world economy is reasonably encouraging for investment prospects, even if stock valuations seem stretched in many markets and there is considerable political uncertainty.
Growth in the US economy seems solidly based with positive business and consumer sentiment positive and low unemployment. Valuations look particularly high for US companies, however, and the country's direction under Trump's presidency remains open to question. A string of judicial challenges and legislative defeats have stalled most of his declared policies.
The UK is facing the upheaval of Brexit. There is still no framework for the future relationship between the UK and the eurozone, and negotiations are likely to be complicated further by UK government's fragile majority. In these circumstances, the ultimate impact of 'Brexit' for the UK and eurozone is difficult to assess. Rising consumer debt in the UK is a concern, particularly since spending is likely to be hurt by the lack of growth in real incomes. By contrast, the outlook for the eurozone has brightened with the strongest economic growth since 2011 and falling unemployment.
Prospects for developing markets are improving. Fast-growing countries with successful reform programmes, such as India, have made further progress, and there has been some recovery in recession-hit Latin American economies.
Economic data from Japan has also been encouraging, even if it has failed to translate into a meaningful increase in consumption. The most attractive investment opportunities continue to be in exporting companies.
Monetary policy remains supportive for investment in most regions. Although central banks are beginning to unwind their accommodative stances in the UK and Europe, they have indicated that this will be an extremely gradual process. Even in the USA, the Federal Reserve is stressing that any further interest rate rises are likely to be made in very small steps.
Recent company earnings results have been generally positive, but market gains have been heavily concentrated. Active investors have favoured growth stocks, particularly large technology companies. This tight market focus has been accentuated by their passive counterparts being merely committed to buying more and more shares in a rising market.
Our investment approach continues to be broadly diversified. The notion of a permanently low-growth low-interest rate environment seems misconceived. Accordingly our allocations include some exposure to gold to balance the weightings in equities and bonds held in portfolios.