IFSL RC Brown UK Primary Opportunities | Fund Update | August 2024
August: UK growth ahead of expectations
UK equities nudged ahead in what was and is traditionally a quiet month for corporate news flow. The month started with significant falls in global equity markets as US payroll numbers came in below expectations causing concern over the health of the US economy. However, the falls proved short lived as expectations of the Federal Reserve quickening interest rate cuts increased in order to stimulate the US economy. Meanwhile in the UK, the outlook remains broadly positive with economic growth now expected to be ahead of previous forecasts and economic growth in 2025 to return to pre Covid levels.*
The UK’s new government is in the process of getting its feet under the table and has announced the budget date of October 30th which will be closely watched and indications there will need to be tax rises to pay for the current budget deficit. We continue to view the election of a moderate, stable government as a positive, and welcome plans for a clear industrial strategy. With the UK continuing to trade at a substantial discount to other major markets, an increase in interest from overseas investors is expected.
The only new addition to the portfolio was house builder Taylor Wimpey though we did use the market weakness early in the month to modestly increase the holdings in HSBC and Melrose.
In August, the IFSL RC Brown UK Primary Opportunities fund returned 0.4% compared with 0.5% for the FTSE All Share and 0.1% for the IA UK All Companies sector, all on a total return basis.
*Confederation of British Industry forecast UK growth of 1.9% in 2025.
Purchases
Taylor Wimpey is one of the UK’s largest house builders. We purchased the shares in the secondary market during the market setback early in the month. We believe house builders are set to be a major beneficiary of the Labour government’s plans to ensure more houses are built to address the chronic under supply of new houses. Whilst we view their target of 1.5m new homes over the next five years as highly unlikely, we do believe there will be an increase on current levels. Taylor Wimpey has a strong balance sheet and pays an attractive dividend yield of 6%
Sales
We sold the remaining modest holdings in Mitie and Londonmetric and reduced the holding in FRP Advisory on strength.
Cumulative Performance (Total Return %) – To 31 August 2024
| Fund/Benchmark Name | 3M | 6M | 1Y | 3Y | 5Y | 10Y | Since Inception (28/05/1997) |
| IFSL RC Brown UK Primary Opportunities P Acc | 3.7 | 12.0 | 15.6 | -2.4 | 23.1 | 76.9 | 504.4 |
| Quartile Ranking IA UK All Companies | 1 | 3 | 3 | 3 | 3 | 2 | 2 |
| IA UK All Companies | 2.5 | 11.9 | 16.5 | 8.5 | 31.1 | 70.0 | 365.1 |
| FTSE All Share | 2.4 | 12.6 | 17.0 | 24.4 | 37.9 | 80.9 | 413.9 |
Source: FE: 31/08/2024
Discrete Annual Performance (Total Return%) – To 31 August 2024
| Fund/Benchmark Name | Year to 31/08/2024 | Year to 31/08/2023 | Year to 31/08/2022 | Year to 31/08/2021 | Year to 31/08/2020 |
| IFSL RC Brown UK Primary Opportunities P Acc | 15.6 | -2.0 | -13.9 | 34.6 | -6.2 |
| Quartile Ranking IA UK All Companies | 3 | 4 | 3 | 2 | 2 |
| IA UK All Companies | 16.5 | 4.1 | -10.5 | 32.4 | -8.8 |
| FTSE All Share | 17.0 | 5.2 | 1.0 | 27.0 | -12.7 |
Source: FE: 31/08/2024
Please be advised that the past is not necessarily a guide to future performance. Investments and the income derived from them can fall as well as rise and the investor may not get back the amount originally invested.
