The Trust produced a Net Asset Value total return of +2.0% during the month and a price total return of +1.6%, compared to a return of +1.3% for the FTSE All-Share Index (TR).
July was a busy month with 22 of our holdings reporting their half-yearly earnings. We were encouraged to see renewed strength in our core consumer-centric companies, some of which had been dented by negative sentiment earlier in the year. Our long-time holding British American Tobacco produced reassuringly solid performance, pushing the share price +10% for the month, with neither the much-cited industry headwinds nor the company’s investments in so-called Next Generation Products preventing strong earnings growth.
In a rather different sector, AstraZeneca also had an excellent month (+12%). We have been patient holders as Astra has undertaken a multi-year reinvigoration of its R&D and drug pipeline. We are finally seeing these efforts bear fruit, with the company rightly receiving recognition for its newly developed world-class treatments, in particular in oncology. They are now on the cusp of offsetting lost sales from older off-patent drugs with new ones, and there is plenty of expansion to come.
We also saw some early signs of Reckitt Benckiser (+9%) reaping rewards from its acquisition of baby formula maker Mead Johnson last year. Infant nutrition is an attractive market with obvious tailwinds, but Mead Johnson also has other growth levers to pull. Compared with the rest of Reckitts, substantially less of its sales, particularly in China, come from e-commerce. However, a recently announced partnership with internet retail giant JD.com to facilitate the supply of infant formula to emerging urban areas in China should prove a significant boost to this channel.