August update. FTSE struggles to make headway. Mid and small cap out-performance
The UK market struggled for direction as volatility remained elevated with concerns over the impact of Covid-19 and as fears of a second wave continue to weigh on the market.
The UK confirmed what we already knew – that we are in a recession – as Q2 GDP declined by over 20%. The Bank of England kept interest rates on hold at record lows of 0.1% and warned that the recovery would take longer than previously thought with pre-Covid levels of GDP not reached until 2022.
August is a traditionally quiet period for corporate activity and this year was no different. We made no new additions to the portfolio. Our only purchases were modest additions to existing large caps Vodafone, National Grid, BP and Royal Dutch Shell at a time of market weakness. All offer attractive dividends, despite recent cuts, and remain modestly valued.
Whilst this was a quiet month, we are aware of a number of fund raisings that are likely to happen in the remainder of the year and have commenced our due diligence process on these opportunities. Companies will continue to seek fresh capital in order to repair their balance sheets, particularly if further lock downs occur. Others will see opportunites in these difficult times and raise capital in order to expand. The IPO market is also showing signs of activity. We, as ever, will continue to cast our slide rule over these opportunities and look to participate in those we view as most attractive.
In August, the IFSL RC Brown UK Primary Opportunities fund returned 2.5% compared with 2.4% for the FTSE All Share and 3.1% for the IA UK All Companies sector.
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
Cumulative Performance (Total Return %)– August 2020
| Fund/Benchmark Name | 3M to 31/08/2020 |
6M to 31/08/2020 |
Year to 31/08/2020 |
3 years to 31/08/2020 |
5 years to 31/08/2020 |
Since Inception (28/05/1997) |
|---|---|---|---|---|---|---|
| IFSL RC Brown UK Primary Opportunities P Acc | 0.6 | -5.3 | -6.2 | -3.1 | 36.5 | 360.3 |
| Quartile Ranking – IA UK All Cos | 2 | 2 | 2 | 2 | 1 | 1 |
| IA UK All Companies | 1.4 | -6.1 | -8.8 | -5.9 | 16.5 | 223.7 |
| FTSE All Share | 0.3 | -7.6 | -12.7 | -8.2 | 17.3 | 225.5 |
Source: FE 31/08/2020
Discrete Annual Performance (Total Return %)– August 2020
| Fund/Benchmark Name | Year to 31/08/2020 | Year to 31/08/2019 | Year to 31/08/2018 | Year to 31/08/2017 | Year to 31/08/2016 |
|---|---|---|---|---|---|
| IFSL RC Brown UK Primary Opportunities P Acc | -6.2 | -3.5 | 7.1 | 23.5 | 14.0 |
| Quartile Ranking – IA UK All Cos | 2 | 3 | 2 | 1 | 1 |
| IA UK All Companies | -8.8 | -3.2 | 6.5 | 13.8 | 8.9 |
| FTSE All Share | -12.7 | 0.4 | 4.7 | 14.3 | 11.7 |
Source: FE 31/08/2020
Source: RCBIM as at 31 August 2020
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. R.C. Brown and Marlborough are authorised and regulated by the Financial Conduct Authority. Marlborough Fund Manager are the ACD. The Key Investor Information Document and the Full Prospectus can be obtained via www.marlboroughfunds.com or by request at: info@rcbpo.co.uk
