Manager's Monthly Report

The Trust produced a Net Asset Value total return of -0.8% during the month and a price total return of -0.8%, compared to a return of -1.4% for the FTSE All-Share Index (TR).

October was a volatile month for UK equities, caused largely by a strong rally in sterling. The threat of a ‘no-deal’ Brexit receded following a revised Withdrawal Agreement and a further extension of the UK‘s EU membership to 31st January 2020.

This prompted strong rises in stocks biased towards the domestic economy, represented in the portfolio by the likes of Domino’s Pizza, Land Securities and WH Smith. Previous bouts of weakness during periods of excessive Brexit-related pessimism had provided us with opportunities to add to many of these more domestically exposed stocks.

On the other hand, international stocks like British American Tobacco, Royal Dutch Shell and Experian lagged as international currency earnings were translated into sterling at less attractive rates. Overall, the portfolio held up fairly well despite its strong bias towards companies with significant overseas operations.

The volatility, coupled with robust levels of new share issuance, presented opportunities to add to a number of holdings including Experian, Unilever and Victrex. In addition, a new holding was purchased – Diageo, the global spirits giant. It is a classic Troy franchise stock, with many long-established brands, from Tanqueray to Talisker, which form the foundations of excellent portfolio growth prospects. Diageo’s dividend has seen uninterrupted growth for over 30 years. Today this dividend currently translates into a 2.2% yield. Underpinned by strong cash- generative characteristics, the company will be a good addition to the income growth engine within the portfolio.


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