Investment Manager’s Commentary

Your Fund returned +1.4% during the month compared to +0.1% for the IA Global (TR) sector.

Equity markets moved on fast from the dramatic spike in volatility that occurred at the start of the month. It remains to be seen if this positive trend can persist for the rest of the year. In the meantime, we are reassured by the improving breadth of returns. In a year defined by excitement for generative AI that has led to big gains for large technology hardware companies, it is remarkable that the total returns from the Fund’s three Swiss healthcare companies – Alcon, Novartis, and Roche – have each outperformed the Nasdaq index. Whilst in many ways the definition of boring dependability, we also view these companies as tech businesses that are innovating at the cutting edge of medical science. In this context we draw confidence from their substantial reinvestments into R&D that are not only yielding encouraging new products but are doing so at improving levels of profitability. The share prices of these companies have risen in recent months as some of the Fund’s holdings in software and internet companies take a pause.

Just as a gardener has much to do in winter, the seeds of diversified investment returns are often sown when conditions appear least promising. Recent financial results have revealed that many consumer-facing companies are experiencing a period of weaker demand. Chinese growth is sluggish whilst the US slows, particularly for more discretionary items. In several cases these trends are a natural consequence of elevated demand during and after the pandemic. A little over 80% of the Fund’s assets are invested in ‘business-to-business’ companies – including the Swiss healthcare stocks – that sell their essential products and services to other corporate or public sector customers. The Fund’s investments in consumer-orientated companies are comparatively modest and they are broadly diversified across alcoholic beverages, beauty products, luxury goods and travel. Whilst we remain optimistic about the longer-term trajectory of these companies, we recognise that subdued demand could last for some time to come. Further weakness in share prices may provide opportunities to increase the Fund’s commitment to these areas.

Past performance is not a guide to the future. The value of the shares and the income from them can go down as well as up and you may not get back the full amount originally invested. Source: Yealand Fund Services Limited, NAV to NAV in sterling with net income reinvested. Returns are shown net of annual management charge, other expenses and net income reinvested. Returns do not include the effect of initial charges.

Investment Objective and Policy

The Company’s investment objective is to seek to achieve long term (at least 5 years) capital growth with some potential for income.

To achieve the investment objective, the Company’s investment policy is to invest principally (at least 80%) in a portfolio of global equities, and may also invest in other transferable securities, bonds (both corporate and government debt securities), collective investment schemes (“CIS”), warrants, money market instruments, cash, near cash and deposits. The Company may borrow and may enter into underwriting arrangements. It is the ACD’s intention that derivatives and forward currency transactions will only be used for the purposes of efficient portfolio management, including hedging, as defined by the Regulations.

The Company is actively managed and has, with the exception of the above noted minimum, no limit to which it can be invested in each sector or asset type, nor is there any particular geographic focus. The Portfolio Manager has full flexibility to adjust the proportion of the property of the Company depending on their view of market conditions and the assets which it believes are most likely to achieve the Company’s investment objective. From time to time the liquidity of the Company may be increased substantially if judged to be in the interests of investors.

The Company may invest in CIS which have different investment strategies or restrictions than the Company, including the ability to invest in derivatives for investment purposes and to gain exposure to assets which are not expressly listed above. Investment in CIS will usually be limited to those which invest primarily in the assets listed above and without exception, CIS will only be held in so far as the rules permit the Company to gain exposure to the assets held by those CIS.

A Glossary of Definitions which provides definitions to some of the technical language used on this website is available from www.yealand.com/policies.

Comparator Benchmark

To gauge the relative performance of the Fund, Shareholders may compare the Fund’s performance against the Investment Association’s Global Sector. This is not a performance target nor constrains the way in which the Fund is managed. For further information on the Sector and its intended use, please refer to the Fund’s Prospectus.