December was a quiet month for fundamental company news. Though European and emerging market indices produced positive returns, the US market finished the month in slightly negative territory, as some questions emerged over the sustainability of the AI capital investment trade, not helped by Oracle’s results. Both the Federal Reserve and the Bank of England cut interest rates, as inflation continues to fall in both the US and the UK. In the UK market, financial and mining stocks led the way, whilst the shares of many quality companies remained deeply out of fashion. IFSL Evenlode Income’s unit price fell -1.0% compared to a rise of +1.4% for the IA UK All Companies sector and a rise of +2.2% for the FTSE All-Share.
In terms of individual holdings, the strongest contributors to return were IntegraFin, Burberry and Reckitt. IntegraFin released strong full-year results, with solid growth in revenue and profit. Burberry’s share price rose thanks to positive conference comments from management on the turnaround. Reckitt held an investor event on the growth opportunity in emerging markets and completed the sale of its Essential Home business. The most negative contributors were Diageo, Informa and Auto Trader. Diageo announced the sale of its East African Breweries shareholding in line with its strategy to divest non-core assets and reduce leverage, but sales data on the US spirits category remained weak. Informa and Auto Trader’s share price decreased on no specific news.
We made some changes at the margin including the exit of small positions in Schroders and Roche following recent share price rises; we have higher conviction in other names in the portfolio. We also exited the small Magnum Ice Cream Company holding that was spun off from Unilever during the month. On the buy-side we topped up a variety of existing positions – the opportunity set is nicely broad.
Aggregate portfolio fundamentals have progressed quite well and at a similar rate to that expected at the start of 2025, but IFSL Evenlode Income's holdings have in aggregate de-rated. Their share prices have therefore been left far behind global and UK benchmark returns in 2025 – stuck between the AI capital expenditure trade that has come to dominate the global index on the one hand, and asset-intensive cyclical stocks such as banks and miners within the UK market context, on the other. The portfolio remains, though, a diversified list of resilient, market-leading quality businesses with good growth prospects and low levels of debt. Valuations and cash generation are compellingly healthy, with the portfolio’s free cash flow yield standing at 5.8%, and forecast to be 6.5% next year.
December was a quiet month for fundamental company news. Though European and emerging market indices produced positive returns, the US market finished the month in slightly negative territory, as some questions emerged over the sustainability of the AI capital investment trade, not helped by Oracle’s results. Both the Federal Reserve and the Bank of England cut interest rates, as inflation continues to fall in both the US and the UK. In the UK market, financial and mining stocks led the way, whilst the shares of many quality companies remained deeply out of fashion. IFSL Evenlode Income’s unit price fell -1.0% compared to a rise of +1.4% for the IA UK All Companies sector and a rise of +2.2% for the FTSE All-Share.
In terms of individual holdings, the strongest contributors to return were IntegraFin, Burberry and Reckitt. IntegraFin released strong full-year results, with solid growth in revenue and profit. Burberry’s share price rose thanks to positive conference comments from management on the turnaround. Reckitt held an investor event on the growth opportunity in emerging markets and completed the sale of its Essential Home business. The most negative contributors were Diageo, Informa and Auto Trader. Diageo announced the sale of its East African Breweries shareholding in line with its strategy to divest non-core assets and reduce leverage, but sales data on the US spirits category remained weak. Informa and Auto Trader’s share price decreased on no specific news.
We made some changes at the margin including the exit of small positions in Schroders and Roche following recent share price rises; we have higher conviction in other names in the portfolio. We also exited the small Magnum Ice Cream Company holding that was spun off from Unilever during the month. On the buy-side we topped up a variety of existing positions – the opportunity set is nicely broad.
Aggregate portfolio fundamentals have progressed quite well and at a similar rate to that expected at the start of 2025, but IFSL Evenlode Income's holdings have in aggregate de-rated. Their share prices have therefore been left far behind global and UK benchmark returns in 2025 – stuck between the AI capital expenditure trade that has come to dominate the global index on the one hand, and asset-intensive cyclical stocks such as banks and miners within the UK market context, on the other. The portfolio remains, though, a diversified list of resilient, market-leading quality businesses with good growth prospects and low levels of debt. Valuations and cash generation are compellingly healthy, with the portfolio’s free cash flow yield standing at 5.8%, and forecast to be 6.5% next year.