Over the first quarter, the Fund returned +8.95% versus +9.34% for the FTSE World ex UK index, underperforming the index but finishing comfortably in the second quartile against a sector average of +8.53%. Five of the nine managers outperformed their own index over the quarter.
Two of the four global managers outperformed strongly over the quarter. Harris Associates rose 12.8% in the first quarter, with good contributions from European and Japanese names in the portfolio. The top three contributors to performance for the quarter were Daimler, Intel and Toyota Motor. MFS also produced strong returns, up 10.6% over the quarter, helped by an underweight and stock selection in the poorly performing energy sector. A number of individual stock positions also helped performance, Linde, WPP Group, Goldman Sachs and Heineken. Walter Scott, which had an excellent 2011, performed just behind the index in the first quarter, up 9.1%. Stock picking in the US and Japan were the main contributors to performance although the underweight to the US held back relative performance. Neptune was the laggard over the quarter, underperforming the index by 3.4%. An overweight to energy and an underweight to financials hurt performance as did the manager’s cash position, which he maintained going into a strong January.
Both of the European mandates performed well, outperforming the European index and the global index. JPM Europe rose 12.4% over the quarter, performing strongly on stock selection including holdings in Henkel, ProSieben, EADS and Solvay. Cazenove also outperformed, benefiting from an overweight to autos and stock selection in the media sector. The Blackrock US index mandate underperformed the index due to the timing of the Fund’s close of day.
After a good 2011, the First State Asia ex Japan portfolio underperformed in the first quarter, up 7.6%. Due to the defensive nature of the portfolio, we would expect it to lag in strong quarters. Hexam had an excellent quarter, up 11.2%, outperforming both the global and Emerging Markets indices. Strong performance came from a number of specific names including Sberbank (Russia) and Nine Dragons Paper (China).
31 March 2012