Global stock markets rose in September, led once again by US-listed technology shares. The increasingly frenzied AI infrastructure investment boom has driven much of the growth in the US economy (and stock market) this year, whilst the rest of the global economy has been mixed. Consumers – particularly the lower income cohort – are making a very slow recovery from the post-Covid cost-of-living squeeze, employment markets are muted, and industrial demand is strong in places but patchy overall. The Federal Reserve reduced rates during the month – with further interest rate reductions from both the Bank of England and the Federal Reserve expected over coming months.
Evenlode Income fell -2.4% compared to a rise of +1.2% for the IA UK All Companies sector and +1.9% for the FTSE All-Share. The UK market’s return, in-line with recent months, was driven by banking, defence and mining shares, to which the fund has no exposure.
In terms of fund holdings, the most negative contributors to return were Diageo, Unilever and LSEG. Diageo and Unilever’s share prices decreased on no specific news, with consumer staples the worst performing sector during the month. LSEG’s share price decreased as investors considered potential competition from generative AI companies. We think growth prospects remain strong as discussed in last month’s factsheet. The most positive contributors to return were GSK, RELX and Informa. GSK’s share price increased following the announcement that Luke Miels, currently Chief Commercial Officer, had been appointed CEO from the beginning of next year. RELX’s share price increased on no specific news, although management’s investor presentations during September highlighted the group’s very strong competitive position in its data analytics verticals. Informa’s share price increased on no specific news.
There were no new entries or exits during the month. We continued to build positions in Weir Group and Autotrader, and added to LSEG and Wolters Kluwer following recent share price weakness. We trimmed Diploma, Halma, Informa, L’Oréal and Reckitt following recent share price strength.
We think this a very interesting juncture for our approach. The Evenlode Income portfolio contains a list of excellent, high return on invested capital, market leading companies on an unusually attractive free cash flow yield. Stuck, within the global market context, between AI infrastructure plays on the one hand and bank/commodity/defence stocks on the other, the shares of many of these quality companies have become relatively unfashionable. Some have not been helped by post-Covid complications over the last three years (particularly for consumer-facing companies), whilst tariff uncertainty and a weak dollar over the last year have also been a headwind for those with US divisions. However, fundamental growth continues at a steady aggregate pace, cash generation is extremely healthy and resilient, and long-term prospects are attractive.
Global stock markets rose in September, led once again by US-listed technology shares. The increasingly frenzied AI infrastructure investment boom has driven much of the growth in the US economy (and stock market) this year, whilst the rest of the global economy has been mixed. Consumers – particularly the lower income cohort – are making a very slow recovery from the post-Covid cost-of-living squeeze, employment markets are muted, and industrial demand is strong in places but patchy overall. The Federal Reserve reduced rates during the month – with further interest rate reductions from both the Bank of England and the Federal Reserve expected over coming months.
Evenlode Income fell -2.4% compared to a rise of +1.2% for the IA UK All Companies sector and +1.9% for the FTSE All-Share. The UK market’s return, in-line with recent months, was driven by banking, defence and mining shares, to which the fund has no exposure.
In terms of fund holdings, the most negative contributors to return were Diageo, Unilever and LSEG. Diageo and Unilever’s share prices decreased on no specific news, with consumer staples the worst performing sector during the month. LSEG’s share price decreased as investors considered potential competition from generative AI companies. We think growth prospects remain strong as discussed in last month’s factsheet. The most positive contributors to return were GSK, RELX and Informa. GSK’s share price increased following the announcement that Luke Miels, currently Chief Commercial Officer, had been appointed CEO from the beginning of next year. RELX’s share price increased on no specific news, although management’s investor presentations during September highlighted the group’s very strong competitive position in its data analytics verticals. Informa’s share price increased on no specific news.
There were no new entries or exits during the month. We continued to build positions in Weir Group and Autotrader, and added to LSEG and Wolters Kluwer following recent share price weakness. We trimmed Diploma, Halma, Informa, L’Oréal and Reckitt following recent share price strength.
We think this a very interesting juncture for our approach. The Evenlode Income portfolio contains a list of excellent, high return on invested capital, market leading companies on an unusually attractive free cash flow yield. Stuck, within the global market context, between AI infrastructure plays on the one hand and bank/commodity/defence stocks on the other, the shares of many of these quality companies have become relatively unfashionable. Some have not been helped by post-Covid complications over the last three years (particularly for consumer-facing companies), whilst tariff uncertainty and a weak dollar over the last year have also been a headwind for those with US divisions. However, fundamental growth continues at a steady aggregate pace, cash generation is extremely healthy and resilient, and long-term prospects are attractive.