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Global Equity Income Portfolio - November 2019


  • The Global Equity Income Strategy returned 1.2%
  • Supported by easier monetary policy, equity markets moved higher during the month
  • Shares in relatively new holdings, Standard Life Aberdeen and AstraZeneca continued to do well.

In the face of poor economic data the US Federal Reserve delivered another 25bp rate cut at its October meeting. The consumer staples sector performed poorly during the month. Other macro events were mostly expected and had minimal impact to markets. Brexit was delayed, Hong Kong reported a recession and Turkey invaded Syria following the departure of US troops. While Johnson & Johnson shares ended up performing in line with the global index the company gave investors much to think about. The month started well as results were ahead of expectations and the firm made an offer to settle all outstanding USA opiate litigation. Mid-month the company announced a voluntary withdrawal of baby talc products as a “sub-trace” quantity of asbestos was reported to have been found during random tests by the Fed. The reported level of 0.00002% is over 5,000 times below the level of 0.1% reported by the FDA in 1986 as giving the equivalent risk to background levels. Johnson’s Baby Powder sales represent a de minimis amount of sales for the company of 0.2%. Nonetheless the recall resulted in considerable negative news and the stock price fell around 6%. Towards the end of the month the company reported that 15 tests on the same bottle and 48 further samples from the same batch found zero traces of asbestos. Investigations into the initial finding showed that the non-J&J testing laboratory used an air conditioner that itself was contaminated with asbestos. J&J shares recovered on this news and the company’s outlook, driven by the pharmaceutical division, continues to look positive and the share price attractive. 

The main disappointment saw Anheuser-Busch commodity price pressure and increasing competition. Full year guidance was reduced by 3-4% but shares fell more than 15% during the month. Thankfully the position had been halved in July, in favour of other holdings, but we clearly we had not expected such poor results. Shares in relatively new holdings, Standard Life Aberdeen and AstraZeneca continued to do well.