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 -0.09% in June, compared to the FTSE All Share return of -0.35%. While the headlines were dominated by political elections across the globe, our main observation of the UK market was an uptick in M&A activity. 

Portfolio holding Hargreaves Lansdown remains in discussion on a possible takeover from a consortium compromising the Abu Dhabi sovereign wealth fund, CVC and Nordic Capital private equity houses. We remain of the view that the proposed offer undervalues Hargreaves Lansdown, valuing the business based on little or no future growth, which we don't believe will be the case. 

Tate and Lyle announced their largest acquisition towards the end of the month. Whilst the deal makes good strategic sense, the size ($1.8 billion) and balance sheet impact resulted in the shares being our worst performer over the period. Whilst the resilient nature of the cashflows in the food ingredients industry helps mitigate some of these risks, our aversion to gluttonous executives attempting strategic deals leaves Tate and Lyle under our microscope as we seek to understand more about the new acquisition.

In June, three of the fund's best performers were Relx, Experian, and London Stock Exchange Group, all of which are global players in proprietary data and analytics. We expect their strong historic growth rates to be accelerated by new AI applications that feed on these companies' vast data banks.

Equipment rental business Ashtead reported its full-year results, with sales growing 12% over the last 12 months. The company's large market share in North America plays into the long-term positive outlook for US infrastructure and commercial construction spending. 4% of that growth came from bolt-on acquisitions, mainly smaller rental companies that Ashtead can plug into its network, thus realising synergies in procurement and back office functions.

Another company with a strong track record of bolt-on M&A is Bunzl, which reported half-year results. The global distribution business has delivered around 7% annual revenue growth over the last decade, with around half of that coming from bolt-on M&A.

Whilst our preference is always for organically generated growth, we welcome smaller "bite-size" acquisitions that are easy to digest so long as they are quickly integrated and completed at attractive prices. Both Bunzl and Ashtead have maintained a post-tax return on capital in the "teens" and a return on equity above 20%. Both are examples of our determination to back management that are excellent allocators of company cashflow.
 

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.