The fund fell in December, marginally less than the MSCI World Index benchmark. The market continues to grapple with the ramifications of what US president-elect Trump’s policies might be, with a lot of uncertainty about how the rhetoric might translate to reality.
The Information Technology sector continued its relative strength in the market, driven primarily by chip and hardware maker Broadcom and devices giant Apple. For the portfolio, IT consultancy Capgemini, networking and security firm Cisco, and software company Microsoft all found favour, whilst another consultancy Accenture fell. The dominance of Broadcom for the benchmark’s return, up +43% in dollar terms in December and a new entrant to the trillion-dollar market value club, is a sign of the times in the market. The company’s artificial intelligence processing accelerators are the cause of the excitement, and hundreds of billions of dollars of value have been ascribed to the company virtually overnight. Financials were the other big contributor to benchmark performance in 2024, and a drag on relative performance for the fund in the year. In December there was a partial reversal of that trend as US banking stocks in particular saw share price declines following a post-US election rally.
For the portfolio the biggest sector weighting is toward consumer goods companies. In December both the ‘staples’ and discretionary sub-sectors outperformed, but for 2024 the sectors for the portfolio lagged the market significantly. European listed businesses were particularly out of favour in the market with Nestlé, L’Oréal, Pernod Ricard and LVMH experiencing significant share price declines in the year. A combination of slowing sales growth, political uncertainty (especially in France), and the general global favouring of US over European-listed companies contributed. Despite some volatility through the covid period these businesses are solid generators of cash flow which is expected to grow through time. Following the decline in share price they are trading at very attractive valuations whether looking at near term measures such as dividend yield or price earnings multiples, or according to our long-term cash flow modelling. These are some examples of the opportunities that are clearly emerging for patient investors despite the overall market’s significant rise.
The fund fell in December, marginally less than the MSCI World Index benchmark. The market continues to grapple with the ramifications of what US president-elect Trump’s policies might be, with a lot of uncertainty about how the rhetoric might translate to reality.
The Information Technology sector continued its relative strength in the market, driven primarily by chip and hardware maker Broadcom and devices giant Apple. For the portfolio, IT consultancy Capgemini, networking and security firm Cisco, and software company Microsoft all found favour, whilst another consultancy Accenture fell. The dominance of Broadcom for the benchmark’s return, up +43% in dollar terms in December and a new entrant to the trillion-dollar market value club, is a sign of the times in the market. The company’s artificial intelligence processing accelerators are the cause of the excitement, and hundreds of billions of dollars of value have been ascribed to the company virtually overnight. Financials were the other big contributor to benchmark performance in 2024, and a drag on relative performance for the fund in the year. In December there was a partial reversal of that trend as US banking stocks in particular saw share price declines following a post-US election rally.
For the portfolio the biggest sector weighting is toward consumer goods companies. In December both the ‘staples’ and discretionary sub-sectors outperformed, but for 2024 the sectors for the portfolio lagged the market significantly. European listed businesses were particularly out of favour in the market with Nestlé, L’Oréal, Pernod Ricard and LVMH experiencing significant share price declines in the year. A combination of slowing sales growth, political uncertainty (especially in France), and the general global favouring of US over European-listed companies contributed. Despite some volatility through the covid period these businesses are solid generators of cash flow which is expected to grow through time. Following the decline in share price they are trading at very attractive valuations whether looking at near term measures such as dividend yield or price earnings multiples, or according to our long-term cash flow modelling. These are some examples of the opportunities that are clearly emerging for patient investors despite the overall market’s significant rise.