The UK stock market was strong during March. Reopening optimism continues, tempered a little by the announcement of further lockdowns in Europe following a rise in cases. It was a quieter month for company news-flow, though results continued to trickle in.

Evenlode Income rose +4.7% compared to a rise of +4.0% for the FTSE All-Share and +3.8% for the IA UK All Companies sector. Gains were broad-based in the portfolio. The most positive contributors to return were Unilever, Relx and Reckitt, whose shares recovered somewhat following underperformance in February. There were no major contributors to negative return, though the shares of Hays, Ashmore and Moneysupermarket drifted lower on no specific news.

In terms of portfolio changes, we are as normal interested in opportunities that combine quality and long-term growth potential with valuation and dividend appeal. In March, we added to holdings such as Reckitt, Hargreaves Lansdowne, Smith & Nephew and Roche. We also broadened out the portfolio by adding new positions in Wolters Kluwer and SGS. Both companies have strong competitive positions, highly cash generative business models and plenty of long-term structural growth potential in their respective markets of B2B data analytics (for Wolters) and quality assurance (for SGS). We continue to monitor an interesting watchlist of other potential new ideas for the fund. On the sell-side, we reduced exposure to a few positions including IMI, Rotork, IBM and Intel.

All the companies in the portfolio have released a trading update or results since the start of the year, and we have spoken to a wide variety of company management teams. The overall picture (as discussed in the fund’s March investment view) is an encouraging one of resilience, strong cash generation and interesting opportunities for long-term growth.

Hugh Yarrow31 Mar 2021
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