The Fund aims to achieve consistent capital appreciation over the longer term by investing in stocks of primarily UK-listed large and mid-sized companies. Up to 10% of the Fund may be in international stocks. A thematic, top-down process is used to identify stock ideas and then married to a rigorous approach to valuation. Portfolio construction is benchmark-unaware with roughly equally-weighted positions in typically 30-40 stocks reflecting high conviction management.

The fund returned -3.75% in October, and the FTSE All Share saw a decline of -4.18%, led by companies across multiple sectors reporting a slowing of demand since the summer. 
On the other hand, the companies in our portfolio have displayed resilience in their results. We continue to believe that the positive long-term fundamentals of through-cycle growth tailwinds, businesses investing organically, and companies that maintain strong balance sheets will help to deliver healthy capital growth for our clients.  

In terms of news flow, RELX reported group like-for-like sales growth of 8%, driven by a strong performance across the group. The Risk division is benefitting from rising demand for digital fraud and identity data and increased levels of switching in the insurance market. The group is testing Lexis and AI in its Legal division, which will soon deliver generative AI for customers, building on the strengths of the division’s extensive AI offering. 

Whitbread is still seeing strong demand for its hotels in the UK and Germany, with its popular value offering gaining share through hotel openings, customers trading down and independent hoteliers exiting. In the first half of their financial year, UK accommodation sales were up 15% year on year and the group increased its earnings by 37%. Investment remains strong, with capex investment rising £100m more than previous guidance thanks to more freehold purchases and a new reservation system, all whilst group ROCE (return on capital employed) grew from 9% in 2023H1 to 12.6% in 2024H1.   

Bunzl reported slowing sales performance, with revenues falling -4.7% in Q3 (an acceleration from the -0.4% reported in the first half results). The group still expects to hit its profit expectations for the year thanks to the tailwinds of re-shoring (increasing inflation-driven price increases) and customer demand for more sustainable products, driving structurally higher margins for the group. We visited the Bunzl HQ in October for a deep-dive meeting on business operations and the group’s bolt-on acquisition strategy. Over an hour and a half of ‘kicking the tyres’, we delved further into the group’s rigorous financial reporting structure incentives, which drive organic growth and good working capital management, and how they target bolt-on acquisitions. 

It is clear from some of the large moves in share prices in response to events that market liquidity is deteriorating. The moves in share prices have been more volatile than the underlying cash flows of the businesses and as we move towards 2024, as rates remain likely to stay higher for longer, we expect the fundamentals of strong balance sheets and valuation control, along with a preference for large and liquid stocks to really benefit fund performance.  
 

Data shown net of fees, net income reinvested. Performance of other share classes may vary and is available on request. Please note that all fund performance is shown against the FTSE All-Share TR Index. Where shown, monthly returns table shows compounded discrete monthly performance.

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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.