The market’s positive tone from June continued in July, with the benchmark MSCI World index up +1.3% in US dollars in total return terms. The twin market themes of growth and value that we highlighted on last month’s factsheet continue, and portfolio companies continue to be largely left behind the enthusiasm. This leaves the fund looking increasingly attractively valued, particularly relative to the broader market. A ‘running’ dividend yield of 2.8% (based on this year’s dividends paid and before withholding tax) compares to 1.8% for the benchmark, paid for by a 5.1% free cash flow yield (3.3% for the benchmark), and a price/earnings ratio of 18x vs the benchmark’s 23x. All of these figures indicate comfortable corporate valuations in the portfolio, more so given the corporate results that have been coming in. We have had reports in respect of the first half of 2025 for over 60% of the portfolio by weight, with a few more ‘off cycle’ companies reporting quarterly results as well. Overall organic revenue growth is averaging +5% on a median basis, and margins have increased slightly. Within that figure there is of course a range of results. On the lower end some of the consumer goods companies have experienced a slowdown. Luxury goods firm LVMH saw revenues fall by -4% for example, whilst alcoholic beverage company Diageo grew its revenues slightly. Toolmaker Snap-on’s revenues declined -2% as its industrial customers reigned in spending, although this is on an improving trend. On the more positive side of revenue growth, financial exchange operator CME Group grew revenues +11% and travel & hospitality IT provider Amadeus saw sales rise +8%. Microsoft’s standout performance continued, with second quarter sales +17% driven by its cloud offering. Whilst the level of the overall market does look high, a compelling opportunity has developed in the high-quality subset of the market represented in the portfolio.
The market’s positive tone from June continued in July, with the benchmark MSCI World index up +1.3% in US dollars in total return terms. The twin market themes of growth and value that we highlighted on last month’s factsheet continue, and portfolio companies continue to be largely left behind the enthusiasm. This leaves the fund looking increasingly attractively valued, particularly relative to the broader market. A ‘running’ dividend yield of 2.8% (based on this year’s dividends paid and before withholding tax) compares to 1.8% for the benchmark, paid for by a 5.1% free cash flow yield (3.3% for the benchmark), and a price/earnings ratio of 18x vs the benchmark’s 23x. All of these figures indicate comfortable corporate valuations in the portfolio, more so given the corporate results that have been coming in. We have had reports in respect of the first half of 2025 for over 60% of the portfolio by weight, with a few more ‘off cycle’ companies reporting quarterly results as well. Overall organic revenue growth is averaging +5% on a median basis, and margins have increased slightly. Within that figure there is of course a range of results. On the lower end some of the consumer goods companies have experienced a slowdown. Luxury goods firm LVMH saw revenues fall by -4% for example, whilst alcoholic beverage company Diageo grew its revenues slightly. Toolmaker Snap-on’s revenues declined -2% as its industrial customers reigned in spending, although this is on an improving trend. On the more positive side of revenue growth, financial exchange operator CME Group grew revenues +11% and travel & hospitality IT provider Amadeus saw sales rise +8%. Microsoft’s standout performance continued, with second quarter sales +17% driven by its cloud offering. Whilst the level of the overall market does look high, a compelling opportunity has developed in the high-quality subset of the market represented in the portfolio.