Global stock markets continued to head higher in May, with trends very polarised. The UK market’s return has been dominated by Financial and Resources stocks over recent months. These sectors now make up nearly 50% of the FTSE All-Share. Meanwhile, the US market (and the global market by proxy) has become increasingly concentrated in and dominated by the AI capital investment trade. The momentum factor in global markets has had its strongest run since the 1999/2000 period.
Evenlode Income rose +0.2% during May compared to +1.2% for the FTSE All-Share and +2.5% for the IA UK All Companies sector. The most negative contributors to return were RELX, LSEG and Autotrader. RELX and LSEG’s share prices decreased on generative AI concerns. We think these companies are on the front-foot with harnessing the new technology, and we view their proprietary datasets, deeply embedded domain expertise and long-standing trusted relationships with risk-averse clients as sources of a formidable competitive advantage and growth opportunities. Some more detailed thoughts on the digital-orientated holdings - which make up approximately 20% of the portfolio - are available in Evenlode Income’s April Investment View – The Fundamental Algorithm. Autotrader’s full year 2026 results were slightly below market expectations, but management noted improving recent trends and full year 2027 guidance is for high single digit earnings growth. The most positive contributors to return were Compass, Intertek and Diageo. Compass released strong interim results with organic revenue growing +7%, and raised guidance for full year operating profit growth. Intertek announced that it was minded to accept EQT’s increased takeover offer of £60 per share, and Diageo reported slightly positive organic revenue growth in its third quarter, ahead of market expectations, and reiterated full year 2026 guidance.
In terms of portfolio changes, we reduced Halma and AstraZeneca, which have performed well over the past year. On the buy-side we added to a variety of existing positions with a highly attractive combination of quality and valuation appeal.
Evenlode Income’s portfolio companies continue to grow at a good rate. For 2026, the current expectation is for more than +5% organic revenue growth, more than +8% organic operating profit growth, and double-digit earnings per share growth. This progress, though, has been offset by a significant valuation de-rating of the portfolio over recent months. The portfolio’s free cash flow yield is now forecast to be 6.4% for this year and 7.0% for next – the most attractive valuation since the fund’s launch in the 2009-11 period.
Global stock markets continued to head higher in May, with trends very polarised. The UK market’s return has been dominated by Financial and Resources stocks over recent months. These sectors now make up nearly 50% of the FTSE All-Share. Meanwhile, the US market (and the global market by proxy) has become increasingly concentrated in and dominated by the AI capital investment trade. The momentum factor in global markets has had its strongest run since the 1999/2000 period.
Evenlode Income rose +0.2% during May compared to +1.2% for the FTSE All-Share and +2.5% for the IA UK All Companies sector. The most negative contributors to return were RELX, LSEG and Autotrader. RELX and LSEG’s share prices decreased on generative AI concerns. We think these companies are on the front-foot with harnessing the new technology, and we view their proprietary datasets, deeply embedded domain expertise and long-standing trusted relationships with risk-averse clients as sources of a formidable competitive advantage and growth opportunities. Some more detailed thoughts on the digital-orientated holdings - which make up approximately 20% of the portfolio - are available in Evenlode Income’s April Investment View – The Fundamental Algorithm. Autotrader’s full year 2026 results were slightly below market expectations, but management noted improving recent trends and full year 2027 guidance is for high single digit earnings growth. The most positive contributors to return were Compass, Intertek and Diageo. Compass released strong interim results with organic revenue growing +7%, and raised guidance for full year operating profit growth. Intertek announced that it was minded to accept EQT’s increased takeover offer of £60 per share, and Diageo reported slightly positive organic revenue growth in its third quarter, ahead of market expectations, and reiterated full year 2026 guidance.
In terms of portfolio changes, we reduced Halma and AstraZeneca, which have performed well over the past year. On the buy-side we added to a variety of existing positions with a highly attractive combination of quality and valuation appeal.
Evenlode Income’s portfolio companies continue to grow at a good rate. For 2026, the current expectation is for more than +5% organic revenue growth, more than +8% organic operating profit growth, and double-digit earnings per share growth. This progress, though, has been offset by a significant valuation de-rating of the portfolio over recent months. The portfolio’s free cash flow yield is now forecast to be 6.4% for this year and 7.0% for next – the most attractive valuation since the fund’s launch in the 2009-11 period.