BY NIGEL KENNETT, SENIOR FUND MANAGER
UK equities were very much back in favour in April, bouncing back strongly after a poor couple of months. The LF Canlife UK Equity Fund broadly kept pace with the rally and continues to be a strong performer in the IA UK All Companies sector year-to-date. The Fund’s consumer sector exposure was a notable contributor, with JD Sports and WH Smith both delivering consensus-beating numbers. Shares in publisher RELX also continued to recover and we believe further upside exists, based on the market catching up with the solid fundamentals of the business, which should also help the stock re-rate. Pharmaceuticals group Shire also boosted performance, following the bid from Japan’s Takeda.
During the month, we maintained the Fund’s focus on our favoured structural growth themes but also took the opportunity to add some new positions. These included two in the aviation space, EasyJet and WizzAir. We are bullish on the outlook for EasyJet, based on an uplift in summer pricing, supportive capacity conditions and improved revenue per seat growth. WizzAir is more of a niche play, but continues to provide a combination of high growth and low cost. Elsewhere in the portfolio, we have reduced our exposure to the materials sector, exiting some positions and trimming others, whilst we also sold our shares in Nex Group following the bid from CME Group.
In our opinion, the UK remains an attractive place to invest and UK equities remain attractively valued on both a P/E and dividend yield basis. Within this environment, we believe the Fund’s focus on well-managed companies and structural growth themes will continue to be well-rewarded. Therefore, we are cautiously optimistic in our outlook for the rest of 2018.
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.
CLI01211 Expiry on 15 August 2018