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.

Market Backdrop 
•    Markets recovered in April, as receding concerns over the banking sector led to declines in bond and equity market volatility. 
•    Regionally, the FTSE 100 was one of the best performing markets in local currency terms, as leadership turned once more towards defensives. The FTSE All Share and FTSE 100 both returned 3.4%, whilst the FTSE 250 added 3.1%. 
•    The oil price increased during the month as OPEC+ decided to cut production, leading the energy sector higher. Combined with a recovery in financials, this led to a reversal in March factor trends, with value the outperformer in April. 
•    UK inflation remained resilient, with March CPI of 10.1% above consensus, leading Gilts to decline. The yield on the UK 10-year Gilt increased 23bps to 3.72%, whilst the equivalent 10-year US Treasury yield declined to 3.42%. GBP strengthened a further 2% versus the US Dollar. 

Fund Performance
•    The fund outperformed the FTSE All Share in April, primarily driven by positive stock selection effects. Sector allocation was also modestly positive during the month. 
•    Financials was the best performing sector, contributing to 50% of the fund’s outperformance. Whilst there were some elements of a recovery in financials names from the March ‘banking crisis’, it was primarily idiosyncratic catalysts in the fund’s holdings that led to the outperformance. 
•    The fund’s small and differentiated position in Numis (43bps) was the top contributor following an announcement that its board had agreed to an all-cash offer from Deutsche Bank to acquire the UK brokerage firm. The offer values Numis at £410m, representing a premium of 72% compared to prior day trading, which led the shares to re-rate on the final day of the month, ending April up 58%. 
•    In a reversal of the prior month’s trends, Barclays (18bps) was the best performing Bank on the FTSE All Share. Whilst some early outperformance can be attributed to an unwinding of March effects, the release of an upbeat Q1 trading statement solidified performance, with all operating divisions delivering double digit growth to report pre-tax profits that beat consensus. 
•    Directline (11bps) was the recipient of analyst upgrades. The share price fell to an all-time low at the end of March, following a profit warning in Q1 and further impacted by the wider insurance sector sell-off. Insurance more broadly recovered in April, registering the strongest performance of any sector, led by insurers with a significant presence in the motor segment. 
•    Industrials names were another source of strong performance, with Qinetiq (18bps) and Melrose (3bps) delivering positive returns. Melrose shares responded positively to the completion of its demerger with Dowlais Group (8bps), whilst Qinetiq reported a strong end to the year, delivering a strong Q4 operational performance and upgrading full year guidance for 2023. Strong cash flow management also reduced the defence company’s leverage ratio to below 1x, a year ahead of schedule. 
•    Housebuilders continued in their recoveries, as the latest RICS data indicated the housing market improved on the prior quarter. Whilst near term outlook remains subdued, housebuilders that reported gave some indication of pressure easing in the medium term on declining supply chain and inflationary pressures, continued moderation in mortgage rates and resilient consumer confidence. Crest Nicholson (27bps) significantly outperformed the sector following speculation of takeover interest on the share tip website Betaville.