The objective of the JOHCM UK Dynamic Fund is to achieve long-term capital growth. The Fund will aim to achieve this objective mainly through investments primarily drawn from companies listed on either of the two primary markets of the London Stock Exchange: the main market and AIM. At least 75% of the Fund’s assets will, at all times, be invested in equity securities of companies domiciled or exercising a predominant part of their economic activity in the United Kingdom. On occasion the Fund may utilise this position to invest a proportion of its assets in equities listed on a recognised exchange outside the UK. Investment will be made primarily in equity securities which are readily marketable, but investments will also be made in equity securities of smaller companies which can be more lightly traded. The portfolio is likely to be fairly concentrated with the Fund typically holding equity interests in between 35 and 50 different companies.

Macro update
•    Global equity markets returned to a risk off mentality in August, driven by hawkish data domestically and concerns over the Chinese economy. 
•    The FTSE 100 and 250 returned -2.5% and -2.4% respectively, while the FTSE All Share returned -2.1%. The UK modestly outperformed European markets but lagged behind the US. 
•    UK GDP data came in stronger-than-expected and was followed by a wage inflation report from ONS that indicated salaries had increased at the fastest pace since records began. Consumer Price Index (CPI) came in at 6.8%, in line with the Bank of England’s forecast but slightly firmer than consensus. Services also recorded a pick-up in inflation. Sentiment improved towards the end of the month, as the British Retail Consortium reported that shop price inflation had fallen. 
•    Concern over economic developments in China and a potential default of property developer Country Garden weighed on China-exposed segments of the market. The People's Bank of China unexpectedly cut policy rates in an effort to boost the economy. 
•    From a factor perspective, leadership came from defensives and low volatility. Earnings revisions and momentum were also strong, as companies that beat consensus and raised guidance continued to be rewarded.  

Performance update
•    The fund outperformed the benchmark by 126bps in August, as stock selection delivered 159bps relative performance, concentrated in the health care, utilities and financials sectors. 
•    The strongest contributor in this period was Convatec, which contributed 67bps to relative return, as the shares rose 12% off the back of a strong set of interim results. The company reported broad based organic revenue growth of 6.6%, whilst delivering an expanded operating margin ahead of consensus expectations. Full-year guidance for 2023 has been raised and is supported by a strong product innovation pipeline.
•    Price momentum in Centrica continued as analysts moved to upgrade forecasts following the strong set of results delivered in July, adding a further 64bps to performance. Spot prices for natural gas* futures increased 21% in July as looming strike action in Australia led to concerns that c.10% of global LNG supply could be impacted, acting as further support for the shares.
•    Rolls Royce shares rose 20%, adding 31bps of relative performance, after reporting first-half results that were materially ahead versus the prior period. The company delivered an underlying operating profit, and free cash flow that was ahead of consensus and upgraded full-year guidance for both metrics, whilst also reporting margin improvements led by the Civil & Defence division. 
•    3i Group added 20bps to relative performance. The shares rose 0.8%, as the company was reported to weigh a €900m sale of Weener Plastics.
•    Finally returning to healthcare, GSK delivered a further 9bps of relative performance. The shares had not responded to beats on both revenue and EPS lines and upgraded guidance at the interim results in July, as analysts bearishly focused on Shingrix’s growth and the R&D strategy. Despite a better performance in August, the shares remain cheap relative to the sector, trading on a Forward 1 Year Price to Earnings (PE) Ratio of 9x. 
•    Crest Nicholson detracted -16bps, as the shares declined -15% after the company issued a profit warning, reporting a marked deterioration in sales rates since June, as higher mortgage rates affect demand. The shares trade on 0.5x TNAV. 
*Gas spot prices relates to BBG ticker NBPG1MON. 
 

Performance data for the period 16 June 2008 to 23 October 2009 is for Ryder Court UK Dynamic Fund. From 23 October 2009 onwards, the Fund converted to the JOHCM UK Dynamic Fund.

Data shown net of fees, net income reinvested. Please note that all fund performance is shown against the FTSE All-Share TR 12pm adjusted. Performance of other share classes may vary and is available on request. Where shown, monthly returns table shows compounded discrete monthly performance. Performance of other share classes will vary and is available on request. During the period 16 June 2008 to 23 October 2009 the performance record is based on the pre-existing share class that had a higher management fee.

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Past performance is no guarantee of future performance. The value of an investment and the income from it can fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested. The annual management charge is deducted from the capital of the Fund. This will increase the income from the Fund but may constrain or erode potential for capital growth. The Funds investment include shares in small-cap companies and these tend to be traded less frequently and in lower volumes than larger companies making them potentially less liquid and more volatile.