BY NIGEL KENNETT, SENIOR FUND MANAGER
Trade war rhetoric dominated the headlines, but fortunately had little impact on the UK market, with investors remaining focused on company results. Equities were broadly flat in aggregate, although we witnessed strong performances from a number of individual holdings, which enabled the LF Canlife UK Equity Fund to lock in some profits. Both gambling operator GVC and catering supplier SSP (the owner of Upper Crust franchises amongst others) both saw significant share price rises. We trimmed our positions as a result, which enabled the Fund to add to ITV and JD Sports, both of which we believe are exciting opportunities.
A new position was also added within the financials space – IG Index – which we believe will benefit as market volatility increases. The company has a good cashflow profile, recently upgraded earnings and retains a low correlation to the rest of the sector. The other major change saw a reduction in our materials weighting, with our mining exposure reduced over some China concerns. We also eliminated our holding in RPC Group.
Instead, we bought industrial and infrastructure specialist Babcock. With a number of government contracts, it has good earnings security and a defensive profile, whilst trading at an attractive valuation given its quality. The overarching theme of the month was one of profit taking, as we looked to recycle proceeds into areas we feel offer more value at present. Despite global macro concerns, in our view the UK market remains attractively valued, with a number of opportunities ripe for active stockpicking.
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.
CLI01259 Expiry on 15 October 2018