BY NIGEL KENNETT, SENIOR FUND MANAGER
We saw limited activity within the CF Canlife UK Equity Fund in August, in what was a relatively quiet month for newsflow. The biggest event saw a staggering share price fall from sub-prime lender Provident Financial, following a poorly executed re-organisation of some of its business practices. The Fund has no exposure to the company, which benefited performance versus the benchmark.
Healthcare, a sector which has struggled consistently this year, also remained weak. Our position in companies such as Hikma and Shire therefore disappointed in August, but we believe the share prices remain far too cheap and that significant upside remains. In contrast, commodity prices continued to rise during the month, which benefited the miners in particular. This was positive for the Fund, with our holdings in stocks such as BHP Biliton and Randgold Resources amongst the top contributors to performance. On a more stock-specific level Associated British Foods also rose on the back of strong results from Primark, one of the leading purveyors of ‘fast fashion’. We expect further positivity to come, both from Associated British Foods, as well as the other structural growth stories in which we invest.
In terms of activity, we added to our position in equipment rental company Ashtead, which we believe is on an attractive valuation following upgrades to forecasts for its dominant US business. The Fund’s exposure to water utilities was also increased as our view is that they have seen unwarranted underperformance in recent months. Although, government regulation will be a headwind, we believe the sector has been oversold and thus represents an opportunity.
Past performance is not a guide to future performance. The value of investments may fall as well as rise and investors may not get back the amount invested. Income from investments may fluctuate. The content of this article is not intended as investment advice.
The information contained in this document is provided for use by institutional investors, professional investors and professional advisers and is not for onward distribution to, or to be relied upon by, private investors. No guarantee, warranty or representation (express or implied) is given as to the document’s accuracy or completeness. The views expressed in this document are those of the fund manager at the time of publication and are subject to change at any time without notice. This document is issued for information only by Canada Life Investments. This document does not constitute a direct offer to anyone, or a solicitation by anyone, to subscribe for shares or buy units in fund(s). Subscription for shares and buying units in the fund(s) must only be made on the basis of the latest Prospectus and the Key Investor Information Document (KIID) available at www.canadalifeinvestments.com.
Canada Life Investments is the brand for investment management activities undertaken by Canada Life Asset Management Limited, Canada Life Limited and Canada Life European Real Estate Limited. Canada Life Asset Management Limited (no. 03846821), Canada Life Limited (no.00973271) and Canada Life European Real Estate Limited (no. 03846823) are all registered in England and the registered office for all three entities is Canada Life Place, Potters Bar, Hertfordshire EN6 5BA. Canada Life Asset Management is authorised and regulated by the Financial Conduct Authority. Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
CLI00927 Expiry on 15 December 2017.