Summary

• The strategy performed similarly to the market in July increasing 0.1%, broadly in line with the benchmark, MSCI AC World Index, which returned 0.3%.

• Anheuser-Busch, AstraZeneca, BAE Systems and Philip-Morris all had impressive earnings and performed well. Pfizer and Johnson & Johnson were the two main disappointments.

• Positions in Anheuser-Busch and Philip Morris positions were reduced given valuations and industry headwinds whilst a new position was added in Unilever.

July was more tepid than hot for equity markets following the June bounce. The strategy performed well in July increasing 1.0% ahead of MSCI AC World Index which returned 0.3%. Pleasingly this outperformance was largely explained by stock selection with a significant proportion of holdings reporting better than anticipated quarterly results.

Alphabet was the strategy’s biggest contributor in July, more than recovering from being the least successful holding in the strategy last month. The company’s quarterly earnings increased 9% year-on-year and were a little ahead of consensus estimates. An additional US$25bn of share buybacks (3% of the market capitalisation) were authorised.

Akamai Technologies and Charles Schwab also performed well with better than expected results. Schwab was sold towards month end as we were concerned that other investors had not fully factored in the impact that the likely US Federal Reserve interest rate cut would have on the future earnings of the company.