Global Equity Income Portfolio - September 2019

Summary

  • The strategy performed relatively well in August falling -1.2% in comparison to the benchmark, MSCI AC World Index, which returned -2.8%.
  • Consumer staples and healthcare names, notably Unilever, Nestle and AstraZeneca, performed well.
  • Philip Morris, the worst performer of the month, announced a potential merger and was sold.

August saw a return of market volatility amidst oscillating trade tensions. Investment markets saw a flight to safety towards traditional haven assets such as gold and government bonds. This was seen too amongst equities where consumer staples, real estate and utilities performed well at the expense of more cyclical and economically sensitive sectors such as financials and materials. The MSCI ACWI fell -2% while the strategy was down -1.2%. Outperformance of the strategy was largely due to a high allocation of consumer staples and also security selection within the healthcare sector.

New holdings Unilever and AstraZeneca continued to perform well with the latter continuing a run of successful late stage clinical trial results.

The Philip Morris International position, reduced last month, was the worst performer during the month and was sold. A proposed merger with former parent company Altria was leaked and confirmed by the firm. Our view of industry headwinds and the relative value split of a new company was unfavourable. Both BP and Shell also performed poorly reflecting a 5% fall in the oil price.

Central banks are reportedly poised to provide interest rate cuts that ought to counter recessionary risks. Irrespective of the efficacy of these actions we continue to believe that investing in high quality companies, offering growth at a reasonable price, will provide good long term returns.