BY CRAIG RIPPE, HEAD OF UK EQUITIES
UK equities delivered a mildly positive return in October, with resources leading the market. This was led by the oil & gas sector, which did well on the back of OPEC agreeing to further cut supply, whilst ongoing corruption investigations in Saudi Arabia also provided a boost. The CF Canlife UK Equity Income Fund is underweight in oil & gas and other resources stocks, as we do not believe 2017’s rally in commodity prices will translate in to a sustained upswing.
Elsewhere, we also saw strength from our position in the non-life insurance company, Lancashire Holdings, which has benefited from capacity being taken out of the market post the hurricane season. We believe it is a high quality sector, which should continue to perform well through 2018. In contrast, bond proxy style sectors such as utilities, telecommunications and utilities underperformed in October as the synchronised global economic recovery and higher interest rate expectations benefited the more cyclical parts of the market.
On a stock-specific note, packaging company DS Smith continued to go from strength to strength with another set of positive results. The company is seeing strong demand from its client base and also continues to complement this organic growth through selective acquisitions in Europe and the US. However, our small holding in UItra Electronics significantly underperformed, having issued a profit warning due to delays with Ministry of Defence contracts. The CEO has departed and we still remain confident in the long-term prospects for the business. We used this bout of share price weakness to top-up our holding.
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 information contained in this document is provided for use by investment professionals and is not for onward distribution to, or to be relied upon by, retail 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 should not be taken as advice, a forecast or a recommendation to buy or sell securities. These views 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.
CLI01015 Expiry 15 February 2018