Fund manager commentary
The Company's net asset value increased 0.9% on a total return basis during the month. This compares with a 0.5% increase in the FTSE All-Share 5% Capped Index, the company's benchmark index, over the same period.
Equity markets have risen strongly over the past year despite the lacklustre global economic backdrop. The combination of both conventional and unconventional monetary stimulus to developed economies in recent years appears to have averted the threat of a sharp economic downturn and has provided the impetus for the strong recovery in financial markets. It has not yet had the desired impact of establishing a sustained economic recovery. The rally in share prices over the past year has taken place against a background of slowing corporate earnings momentum. In the absence of an acceleration in the pace of global recovery it is difficult to see an improvement in the pace of earnings and dividend growth. It is for that reason we believe that businesses which can demonstrate earnings resilience, have strong balance sheets and well covered dividends will remain well supported.
The Company's position in Associated British Foods, the retail, food ingredients and manufacturing business, was reduced during the month. AB Foods owns the Primark discount retail chain which is well positioned to continue to take market share from its competition on the high street. While we remain fundamentally positive on the future prospects for the business it was felt prudent to top-slice our position following a substantial re-rating of the shares.
As at 30 April 2013
Percentage growth, total return, bid to bid price with net income reinvested in sterling. Basis in accordance with the regulations of the FSA. Past performance is not a guide to future performance. Stock market movements may cause the value of investments and the income from them to fall as well as rise and investors may not get back the amount originally invested. A fund investing in a specific country carries a greater risk than a fund diversified across a range of countries. Changes in rates of exchange may have an adverse effect on the value, price or income of investments. If markets fall, gearing can magnify the negative impact on performance. The discrete annual performance table refers to 12 month periods, ending at the date shown.