Market Review
After a strong start to the year, March brought an end to the UK market’s three-month winning streak to leave the FTSE All Share index up 6.1% over the quarter. The banking stocks led the way, beneficiaries of the second tranche of the European Central Bank’s long term refinancing operation.
Fund Performance
The Fund was ahead of the peer group average return in the first quarter of 2012 with strong stock selection the key driver of performance. The main stock level contributions came from India focussed energy firms Indus Gas and Essar Energy where the weighting within the Fund was increased in March capturing a near 50% gain on the stock.
Fund Positioning
The Fund was underweight the mining sector for most of the second quarter of 2011, a period during which it underperformed the wider market by close to 20%. During the first quarter of 2012 we reduced this underweight position, adding Xstrata and Rio Tinto to the portfolio. We continued to build positions in our conviction buy ideas including Imperial Tobacco, Invensys and DS Smith.
Peter Cockburn
31 March 2012