The fund returned +2.5% in US dollars (I Acc USD units) in May, behind the benchmark MSCI World Index which snapped back following the sharp declines seen in April. The broader stock market has continued to be volatile as US trade policies are in a state of flux. The impact from the daily-changing tariff regime on sentiment, the cost of borrowing and foreign exchange rates is being compounded by an aggressive tax cutting and spending bill being passed through the US houses of government. This is having the effect of pushing US Treasury yields up at the same time as the dollar is weakening, an unusual combination.
Meanwhile across the Atlantic in Europe governments are responding to the US political situation and the war in Ukraine by committing to more public spending on defence, notably in Germany and the UK. Government borrowing costs are also rising on the continent, and all told the situation across equity, debt and private asset markets can be described as volatile.
In the midst of all of the macroeconomic and geopolitical noise, corporations are getting on with business and the first quarter reporting season came to a close in the month. Organic revenue growth[1] for the portfolio came in at +5% on a weighted average basis with a similar figure for total reported growth. This compares to flat revenues for the MSCI World Index in US dollars compared to a year earlier (source: Bloomberg). The idea of US exceptionalism is visible in quarterly revenues for the MSCI US Index rising by +6%. The portfolio is thus closer to the US than the broader global stock market in fundamental performance terms, but trades at a more attractive valuation in our estimation. Through all the market noise, these observations give us satisfaction that the two pillars of corporate performance and valuation that are key to our investment approach are intact.
[1]Excludes growth attributable to mergers & acquisitions, and foreign exchange.
The fund returned +2.5% in US dollars (I Acc USD units) in May, behind the benchmark MSCI World Index which snapped back following the sharp declines seen in April. The broader stock market has continued to be volatile as US trade policies are in a state of flux. The impact from the daily-changing tariff regime on sentiment, the cost of borrowing and foreign exchange rates is being compounded by an aggressive tax cutting and spending bill being passed through the US houses of government. This is having the effect of pushing US Treasury yields up at the same time as the dollar is weakening, an unusual combination.
Meanwhile across the Atlantic in Europe governments are responding to the US political situation and the war in Ukraine by committing to more public spending on defence, notably in Germany and the UK. Government borrowing costs are also rising on the continent, and all told the situation across equity, debt and private asset markets can be described as volatile.
In the midst of all of the macroeconomic and geopolitical noise, corporations are getting on with business and the first quarter reporting season came to a close in the month. Organic revenue growth[1] for the portfolio came in at +5% on a weighted average basis with a similar figure for total reported growth. This compares to flat revenues for the MSCI World Index in US dollars compared to a year earlier (source: Bloomberg). The idea of US exceptionalism is visible in quarterly revenues for the MSCI US Index rising by +6%. The portfolio is thus closer to the US than the broader global stock market in fundamental performance terms, but trades at a more attractive valuation in our estimation. Through all the market noise, these observations give us satisfaction that the two pillars of corporate performance and valuation that are key to our investment approach are intact.
[1] Excludes growth attributable to mergers & acquisitions, and foreign exchange.