Manager's Monthly Report

The Trust produced a Net Asset Value total return of +1.8% during the month and a price total return of +1.8%, compared to a return of +3.3% for the FTSE All-Share Index (TR).

December was a notable month in UK politics, with the third general election in five years resulting in a landslide Conservative majority of 80 parliamentary seats, the largest since 1987. Short term, this provides an incrementally better backdrop for investment in the UK, and equity and currency markets have understandably reflected this view in subsequent movements. A better backdrop notwithstanding, 2020 may well see further volatility in UK assets, particularly if the government remain insistent that any transition arrangement with the EU will cease at the end of the year, creating a tighter timetable for trade negotiation.

Looking back at 2019, it was a pleasing year for the Trust, which posted a total share price return of +21.9% - marginally higher than the +19.2% of the FTSE All-Share Index (TR) in what was an exceptionally strong year for the market. This can be put down to stock-specific gains within the Fund, such as in the case of WH Smith and Experian, but also due to the fact that market performance was broad-based and not simply led by cyclical companies, which we consistently seek to avoid. To have achieved this in 2019, having protected capital better than the market in 2018, is a satisfactory outcome.

Turning to 2020 and beyond, we continue to invest selectively in competitively advantaged, resilient, growing companies that can compound free cash flow, and thus dividends per share, well into the future. Some of these quality businesses will inevitably not have the very highest of dividend yields today, but will deliver the compounding value and dividend growth we seek for the long term.

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