Summary

• The strategy performed well in July increasing 1.6% ahead of benchmark, MSCI AC World Index, which returned 0.3%.

• A significant proportion of the holdings reported better than anticipated quarterly results with Anheuser-Busch, AstraZeneca and Philip Morris performing well.

• 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 1.6% 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.

Anheuser-Busch, AstraZeneca and Philip Morris also performed well with better than expected results. Positions in Anheuser-Busch and Philip Morris positions were reduced given a view on valuation and headwinds in their industries.

A new position was added in Unilever. The Anglo Dutch company provides well diversified consumer staples exposure with a large portion of the business in emerging markets. The company has been repositioning away from slower growth, lower return areas, such as food. Investments have been made in faster growth, higher return areas such as beauty and personal care. Over time we envisage that the market will begin to value the company in line with global beauty and personal care peers which trade on higher multiples than food-orientated peers.