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Global Equity Income Portfolio: May 2024

Global equity markets rose in May. Overall, the FTSE All World High Dividend Index gained 2.9% while the Ashburton Global Equity Income Model Portfolio (USD) returned 2.3%. Outperforming stocks held during the month included Imperial Brands (9.2%), VW (9.1%) and Diversified Energy (8.3%).

Delivering strong operational results, Imperial Brands’ results were broadly in line with expectations. Bullish sentiment saw VW shares rally somewhat, before declining after month end as shares began to trade without their large dividend attached. Year-on-year declines in earnings for Diversified Energy, due to lower natural gas prices, we believe to be more than offset by the substantial, and in our view sustainable, dividend yield offered by the shares of close to 8%.

Equity issuance from National Grid resulted in disappointing share price performance of  negative 7.7% during the month, though on the positive side this ought to add to the regulated asset base and help drive returns on capital in the longer term.

Justification of short-term market movements, as discussed last month, is a fool’s errand. Indicators in the long term remain generally positive for equites with companies generating aggregate earnings growth, liquidity remaining buoyant, and valuations not being overly stretched. Many elections will occur globally this year and while technically they are independent, central banks historically appear to have supported liquidity in election years. More cautiously, thinking longer term, equity market corrections have often historically been foreshadowed by high bond yields and low equity risk premia. Yields of bonds continue to be somewhat at odds with the earnings yields of equities, though this is not currently at levels to cause great concern.

Disclaimer:

Waystone Management Company (Lux) S.A. is regulated by the Commission de Surveillance du Secteur Financier (CSSF) (ref A00000395 & S00000734), Waystone Management Company (Lux) S.A. is a company located in Luxembourg, L-1273 Luxembourg at 19, Rue de Bitbourg. This document is issued by Ashburton (Jersey) Limited (The Investment Manager) which has its registered office at IFC1, The Esplanade, St Helier, Jersey JE4 8SJ, Channel Islands and is regulated by the Jersey Financial Services Commission. Ashburton Investments is a registered trading name of Ashburton (Jersey) Limited. In the event a potential investor requires material risks disclosures for the foreign securities included in a portfolio, the manager will upon request provide such potential investor with a document, outlining potential constraints on liquidity & repatriation of funds; Macroeconomics risk; Political risk; Foreign Exchange risk; Tax risk; Settlement risk; and Potential limitations on the availability of market information. The value of participatory interests and the income from them may go down as well as up and is not guaranteed. Past performance is not necessarily a guide to the future performance. Where an investment involves exposure to a currency other than that in which it is denominated, changes in rates of exchange may cause the value of the investment to go up or down. CIS portfolios are traded at ruling prices and can engage in borrowing and scrip lending. A full detailed schedule of fees, charges and commissions is available from Ashburton on request and incentives may be paid and if so, would be included in the overall costs. The manager does not provide any guarantee either with respect to the capital or the return of a portfolio. The manager has a right to close the portfolio to new investors in order to manage the portfolio more efficiently in accordance with its mandate. This document does not constitute an offer or solicitation to any person in any jurisdiction in which Ashburton Investments is not authorised or permitted to communicate with potential investors, or to anyone who would be an unlawful recipient. The original recipient is solely responsible for any actions in further distribution of this document and should be satisfied in doing so that there is no breach of local legislation or regulations. This is a marketing communication. Additional information about this product, including brochures, application forms and annual or half-yearly reports, can be obtained from the Manager, free of charge, and from the website: www.ashburtoninvestments.com. In South Africa, the Fund(s) is/are approved for promotion under section 65 of the Collective Investment Schemes Control Act 2002. The Fund Prospectus, and further information including pricing and changes, may be viewed at the Fund’s representative office in South Africa: Ashburton Management Company (RF) Proprietary Limited (“Ashburton CIS”), 3 Merchant Place, 1 Fredman Drive, Sandton 2196. Ashburton CIS is an approved collective investment schemes manager regulated by the Financial Sector Conduct Authority and a full member of the Association of Saving and Investments South Africa.