IFSL RC Brown UK Primary Opportunities | Fund Update | September 2023
September: Interest rate peak?
The UK and particularly the FTSE 100 moved higher over the course of September as the UK market significantly outperformed other major markets, notably the US which recorded its worst fall of the year. Inflation fell again (to 6.7%) and below forecasts. The Bank of England held rates at 5.25%, after fourteen consecutive rises, fuelling hopes that interest rates have peaked. Whilst we believe interest rates in the UK are at or close to peaking, expectations of rate cuts have been pushed out to late 2024. With oil rising to over $90 as a result of the global economy proving resilient and Russia and Saudi Arabia reducing supplies, inflationary pressures persist and will be closely watched by central banks.
No new holdings were added to the portfolio in the month. The holding in London Stock Exchange was marginally increased following a placing of Thomson Reuters stock. We are heading into what is typically a busy time for corporate activity and with economic growth proving stronger than many market participants expected, we anticipate a pickup in activity in what has been a quiet year. Like many companies that have been reporting results, we remain cognisant of the difficult economic environment but cautiously optimistic that we are moving into a period that will better suit equity investing.
UK equity valuations remain at historic lows compared with the US. M&A remains a theme as overseas buyers pick off undervalued companies.
In September the IFSL RC Brown UK Primary Opportunities fund returned 2.2% compared with 1.8% for the FTSE All Share and 0.6% for the IA UK All Companies sector.
Purchases
No new holdings were added in the month.
Sales
Sigmaroc was sold for a modest profit following a reassuring update. The holdings in Hollywood Bowl and Melrose were both trimmed on strength, along with BP and Shell, taking advantage of the higher oil price.
Cumulative Performance (Total Return %) – To 30 September 2023
| Fund/Benchmark Name | 3M | 6M | 1Y | 3Y | 5Y | 10Y | Since Inception (28/05/1997) |
| IFSL RC Brown UK Primary Opportunities P Acc | 0.8 | 0.5 | 5.7 | 21.1 | 4.4 | 71.9 | 434.1 |
| Quartile Ranking IA UK All Companies | 3 | 3 | 4 | 3 | 3 | 2 | 2 |
| IA UK All Companies | 0.9 | 0.2 | 12.8 | 26.4 | 10.2 | 59.7 | 301.9 |
| FTSE All Share | 1.9 | 1.4 | 13.8 | 39.8 | 19.7 | 71.8 | 347.3 |
Source: FE: 30/09/2023
Discrete Annual Performance (Total Return %) – 30 September 2023
| Fund/Benchmark Name | Year to 30/09/2023 | Year to 30/09/2022 | Year to 30/09/2021 | Year to 30/09/2020 | Year to 30/09/2019 |
| IFSL RC Brown UK Primary Opportunities P Acc | 5.7 | -18.4 | 40.4 | -12.9 | -1.1 |
| Quartile Ranking IA UK All Companies | 4 | 3 | 1 | 2 | 3 |
| IA UK All Companies | 12.8 | -15.3 | 32.4 | -12.8 | 0.0 |
| FTSE All Share | 13.8 | -4.0 | 27.9 | 16.6 | 2.7 |
Source: FE: 30/09/2023
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.
