Investment Manager’s Commentary

Recent equity market returns are characterised by two divergent trends – persistent excitement about AI, and evidence of slowing consumer spending, particularly in the US. These forces are reflected in the top and bottom contributors to the Fund’s second quarter return. Alphabet was the Fund’s biggest contributor by some distance as fears about AI’s disruption of Google Search fade in the presence of solid revenue growth, expanding margins, and accelerated capital returns to shareholders. Adobe and Microsoft were also among the Fund’s top five contributors as investors become more confident about these companies’ investments in AI.

At the other end, companies exposed to weakening consumer spending performed less well. These consist of payments companies that earn revenue from the payment volumes that they process, and companies including Diageo and LVMH that sell more discretionary consumer items. By contrast, the investment in Booking Holdings, owner of online travel agent booking.com, was among the Fund’s top contributors as consumers continue to prioritise travel spending.

The contrasting fortunes of different parts of the stock market provide opportunity to adjust the portfolio to improve its quality. During the quarter, the Fund became an investor in Amadeus IT Group and sold out of Becton Dickinson. Investments in Adobe and LSEG were increased, and several investments were reduced, largely on valuation grounds.

Despite its superior capital efficiency and growth prospects, the Fund’s collection of wonderful businesses is valued at approximately the same multiple of cashflow as the wider market. This builds confidence in the Fund’s future returns.

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.