BY CRAIG RIPPE, HEAD OF MULTI-ASSET FUNDS
The LF Canlife UK Equity Income Fund continued to perform well in May, as a rebound in consumer confidence improved public finances and strong employment data boosted the equity market. There was some nervousness surrounding the political situation in Italy, but the UK was relatively insulated from market falls on the continent. The Fund itself remained focused on its favoured ‘unusual dividend’ themes, as well as some of the more value areas of the market.
In terms of absolute performance, we benefited from our exposure to the oil and gas sectors, which continued to rise on the back of a higher oil price. Pharmaceuticals also remained strong, with our exposure to Hikma a particular boost to the Fund. In contrast, telecommunications lagged the market, as did the tobacco sector. However, we took advantage of share price weakness in Imperial Brands to add to our position, as it is an improving business and is finally making some positive moves into the ‘alternative’ tobacco space. Elsewhere, we also reduced our exposure to some of our top performing holdings, taking profits in DS Smith and Phoenix Group.
Looking forward, the global economic foundation remains fair for now, although the steepness of the US yield curve appears to be on an ever-flattening trajectory, which concerns us on a medium term view. In the UK, despite the uncertainty the economy is still resilient and the markets have priced in a half chance of a rate rise from the Bank of England in August.
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.
CLI01231 Expiry 15 September 2018