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STANLIB Offshore United Kingdom Fund - News
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Stanlib United Kingdom comment - Jun 11
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Tuesday, 20 September 2011
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Fund Manager Comment
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Market Environment
UK equities advanced modestly during the second quarter of 2011 given the volatile environment. A broad improvement in the outlook for corporate earnings supported markets, but investor confidence was frequently tested due to a variety of reasons, notably continuing concerns about the European debt crisis. A rebound in the UK's GDP in the first quarter of 2011 provided an early boost to equities, but subsequent economic data releases in the UK, as well as major economies such as the US, were mixed and pointed to an uneven recovery. These concerns were further aggravated by the uncertainty surrounding a resolution to Greece's debt problems. Nevertheless, stocks staged a strong rally towards the end of the quarter, as Greek lawmakers passed a package of austerity measures needed to avoid an immediate default. Most sectors ended in positive territory, but the market volatility meant that investors were unwilling to take excessive risk. Against this backdrop, traditionally defensive sectors outperformed the broader market.
Fund Performance The fund underperformed its benchmark during the quarter, primarily due to an overweight stance in banks, where European debt concerns proved to be a drag, and basic material stocks, which fell amid demand concerns. On a positive note, the overweight position in the health care sector contributed, as investors looked for safe havens during periods of market volatility.
Positions in the banking sector hampered performance Sovereign issues in Europe dominated the performance ofthe banking sector. Investor sentiment was also hit by news that the industry will pay higher-than expected provisions for customer compensation related to past sales of payment protection insurance. Lloyds Banking Group and Barclays were among the notable detractors.
Exposure to BG Group hurt returns Following a period of strong performance, BG Group succumbed to general profit taking in the oil & gas sector. I continue to believe that the long-term production profile of this company is significantly stronger than that of its peers.
Positive outlook lifted holdings in GKN and Pearson Exposure to automotive and aerospace engineering group GKN proved beneficial after the company reported higher profits for the first quarter of 2011. The position in education publisher Pearson also contributed after the firm maintained its positive earnings projections for 2011.
Fund Positioning
I still believe that UK equities, many larger companies in particular, are attractively valued. I continue to strategically focus on mispriced industry winners, those companies that have a strong and sustainable competitive advantage leading to attractive longterm grow1h prospects. In a number of industries, the valuation gap between "winners" and "losers" is small, with many industry winners not trading at significant premiums, therefore presenting compelling long-term investment opportunities. Although out of favour at the moment, I maintain my overweight positions in the mining and banking sectors. Miners will continue to benefit from ongoing grow1h in emerging markets and profitability in the banking sector is set to improve significantly in coming years, a factor that is not reflected in the current depressed valuations.
New position in Diageo
Diageo's strong global franchise in the beverages sector, its excellent portfolio of brands and good sales outlook due to its position in emerging markets mark it out as a long-term industry winner.
Increased exposure to GlaxoSmithKline
We held a number of meetings recently with senior management at Glaxo. Already one of the fund's larger positions, I added to the existing holding following those meetings. Despite its recent good performance, I believe there is still significant value to be unlocked in the firm.
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Stanlib United Kingdom comment - Mar 11
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Tuesday, 14 June 2011
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Fund Manager Comment
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Market Environment
UK equities ended the fi rst quarter in positive territory. However, investor sentiment remained subdued for much of the period, following offi cial data that showed an unexpected decline in GDP during the fourth quarter of 2010 as well as due to political troubles in the Middle East and North Africa. Stocks suffered a sharp decline in March in the aftermath of a massive earthquake and tsunami in Japan, which led to fears about a nuclear crisis. Furthermore, persistently high infl ation prompted speculation that the Bank of England (BoE) will start raising interest rates soon. European sovereign debt problems also remained in the news. Equities recovered towards the end of the period as perception rose that some of the geopolitical concerns might be overdone. Meanwhile, the measures laid out in the latest UK budget were widely perceived to be fi scally neutral, as the government adhered to its plan to reduce the large public defi cit. Sector trends were mixed, refl ecting the volatile market environment during the quarter.
Fund Performance
The portfolio underperformed its benchmark over the quarter, primarily due to an overweight stance in materials stocks, which fell amid demand concerns. Stock selection within the energy sector was benefi cial; notably, the holding in gas producer BG Group rose after it reported an increase in fourth-quarter profi ts and announced yet another oil discovery in its Santos Basin fi eld, offshore Brazil. Positions in the banking sector hurt performanceWorries about the European debt crisis and strict new regulations on capital requirements weighed down key holdings, such as Lloyds Banking Group. Nevertheless, the long-term outlook for banks is positive following the structural changes made in the wake of the fi nancial crisis. The holding in Tesco detracted from returns Shares in this supermarket major fell as bad weather led to weak sales during the important Christmas period. Rising infl ation and a fall in consumer confi dence also acted as headwinds. Positive outlook lifted holdings in Shire and Pearson Pharmaceutical group Shire reported encouraging growth in 2010, supported by an increase in sales of its hyperactivity treatment Vyvanse. Educational publisher Pearson also recorded a strong rise in 2010 earnings, boosted by the sale of a controlling stake in Interactive Data and good gains in digital offerings.
Fund Positioning
Whilst the UK economic outlook is subdued, the global recovery is helping to underpin the earnings of companies with international exposure. I continue to focus on this theme within the portfolio, notably with an overweight position in mining. Banks are another key overweight, as I believe that their valuations are attractive and regulatory fears are overdone. The fund continues to hold quality franchises trading at attractive valuations, notably WPP and Johnson Matthey. Increased exposure to Anglo American Anglo American has diversifi ed commodity exposure with a strong growth outlook. I believe the stock valuation is compelling and there is a possibility that the company might become a bid target. Raised the holding in GlaxoSmithKline. GlaxoSmithKline is a quality franchise, having a number of world leading businesses with the potential to deliver strong growth. I think the group's current valuation is trading at a substantial discount to the sum of its parts. Sold Rotork This engineering fi rm provides parts to the mining industry. The company has a niche position and has delivered strong earnings growth. Its shares are now trading at a notable premium to its peers, and I do not believe that its earnings can accelerate enough to justify this.
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Stanlib United Kingdom comment - Dec 10
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Friday, 25 February 2011
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Fund Manager Comment
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Market Environment
UK equities recorded positive returns in the fourth quarter, with the benchmark FTSE All Share Index returning 7.4%. Apprehensions about the economic recovery eased over the period as the US Federal Reserve announced a second round of quantitative easing in November, while the European Central Bank indicated that it is prepared to extend stimulus measures. Investors also welcomed plans for the large-scale reduction in UK government spending, announced in October, aimed to cut the country's spiralling public defi cit. However, there were major concerns around the re-emergence of the European sovereign debt problem, as Ireland became the second eurozone country to require a bailout after Greece. Against a backdrop of increasing optimism about the economic recovery, most sectors ended in positive territory. Resources companies were the largest contributors to overall market returns amid expectations of strong future demand. Market trends also showed a move away from the traditionally defensive sectors. The Bank of England's policymakers kept interest rates on hold at 0.5% over the quarter.
Fund Performance
The fund underperformed its benchmark during the quarter. An increase in investors' risk appetite over the period meant that the more cyclical sectors of the market were back in focus. Against this backdrop, holdings in the mining sector contributed to returns, but positions in the banking and support services sectors undermined performance. The overweight stance in banks detracted There were widespread concerns that the potential contagion of the European sovereign debt crisis could hit the banking systems in major economies, including the UK. The holdings in Lloyds Banking Group and Barclays fell as a result, although most of the bad news already seems to be priced in. Holdings in outsourcing majors Serco and Capita held back returns Uncertainty surrounding the impact of the UK government's austerity measures on the earnings of these companies weighed upon their performance. Nevertheless, the outsourcing opportunity in the UK public and private sectors remains signifi cant, and both Serco and Capita, with their market leadership, broad skill set, scale and existing customer base stand to benefi t in the medium to long term. Overweight in the mining sector contributed Xstrata, BHP Billiton and Rio Tinto were among the leading contributors to market gains during the quarter, as higher metal prices and improving sector earnings estimates lifted these shares.
Fund positioning
I continue to be bullish on equities and I am focused on quality cyclical plays that benefit from an improved macroeconomic environment such as resources stocks, WPP, Rolls-Royce and GKN. I also remain overweight in the banking sector, which is benefi ting from changes to the industry tructure, for example, a reduction in competitors, which should enable an improvement in returns. The fund is also focused on companies with strong franchises, good management and exposure to emerging markets such as GlaxoSmithKline. Acquired ICAP and Travis Perkins The growth outlook for ICAP is impressive, as we see increased volumes of trades being put through electronic platforms and rising pressure for regulation of over-thecounter (OTC) markets. ICAP also has high operating leverage with the prospect of margin growth. Given the growth outlook, I believe the valuation is very attractive. Travis Perkins is a collection of high quality businesses, and is creating value through strategic acquisitions. Sold Dixons While the company has done well when it comes to improving its operating structure, the environment it operates in means that it is likely to face continuing challenges. The products it sells are relatively commoditised, resulting in strong price competition and relatively low margins. In addition, the outlook for the UK consumer remains diffi cult.
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Stanlib United Kingdom comment - Sep 10
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Wednesday, 5 January 2011
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Fund Manager Comment
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Market Environment
The UK stock market recorded double-digit returns in the third quarter, as worries about the sustainability of the global recovery eased. Positive economic data and encouraging earnings reports, in addition to increasing merger & acquisition activity, led to an improvement in risk appetite. Apprehensions about the recovery process did not fully fade away, but investors were reassured by the willingness of global governments for providing further stimulus measures to shore up economic activity. There was increased focus on some of the more cyclical areas of the market, in part due to expectations of continued strong demand, notably from China, for commodities. Mining and oil & gas stocks were among the key gainers. In contrast, the defensive sectors underperformed the broader market. On the economic front, reports from the jobs, manufacturing and retail segments were largely positive, although housing market indicators were less conclusive. The Bank of England's policymakers kept interest rates on hold at 0.5% over the quarter.
Fund Performance
The fund marginally outperformed its benchmark over the quarter as equities rallied. Rising risk appetite meant that cyclical stocks were back in focus, whereas investors moved away from the defensive sectors, which had done well in the previous three month period. An overweight stance in the mining sector and an underweight exposure to most of the defensive sectors benefited from this shift in sentiment. Improving outlook lifted the holding in Lloyds Banking Group Part-nationalised bank Lloyds posted strong earnings growth in the first half of 2010, which beat forecasts. Total impairments more than halved from the same period in the previous year and capital levels seem robust. Stock valuation remains attractive compared to its history. The holding in GKN supported returns Shares in GKN, a leading component manufacturer for the automobile industry, rose sharply as an upturn in automotive markets resulted in a strong improvement in trading, and helped the company return to profits growth in the fi rst half of 2010. The underweight stance in BP hurt relative performance Oil & gas major BP was among the key gainers in the third quarter, as its shares recovered from the very sharp falls seen in the April-June period. The rally was supported by news that the company had finally managed to permanently seal its leaking oil well and the appointment of a new chief executive.
Fund Positioning
The portfolio has remained relatively unchanged over the period. I continue to focus on large-cap companies and identify industry winners that can do well in an environment where growth is scarce. These companies tend to have dominant market positions and are well-placed to increase market share. Examples of these companies in the portfolio include Tesco and Pearson. The large-cap companies in the portfolio also tend to possess strong balance sheets and are well-positioned to make strategic acquisitions. Added to the position in British Airways I increased the holding in British Airways. The company benefits from its new base at Heathrow and profitable routes such as North America. The group continues to experience pricing, cost cutting and volume improvements. There will also be synergy benefits from the merger with Iberia and its shares are trading on an attractive valuation. Reduced the holding in Inmarsat Inmarsat is currently embarking on an investment phase as a result of perceived new market opportunities, the benefits of which will take time to come through. The increase in capital expenditure will limit earnings growth and I believe that there are more attractive opportunities elsewhere. I reduced this holding towards the end of the quarter.
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Stanlib United Kingdom comment - Jun 10
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Thursday, 9 September 2010
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Fund Manager Comment
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Market Environment
Following four successive quarters of gains, UK equities declined during the April-June period. Nervousness returned to the market as concerns rose that the European sovereign debt crisis could curtail a global economic recovery. A $1 trillion eurozone rescue package, aimed to stop potential debt defaults in the region helped to ease these worries partially. The troubles at oil major BP, whose shares fell significantly due to fears about the financial impact of the Gulf of Mexico oil spill, further dampened sentiment. Meanwhile, following an inconclusive election in May, a Conservative-Liberal Democrat coalition government took office and announced plans to reduce the nation's large public deficit in an emergency budget. Investors cautiously welcomed these steps, although there were some worries that the deep spending cuts could drag the economy back into a recession. On the policy front, the Bank of England's policymakers kept interest rates on hold at a record low of 0.5% over the quarter.
Fund Performance
The fund performed slightly underperformed its benchmark over the quarter. Resources stocks came under pressure as the demand outlook weakened, and the more defensive sectors were back in favour. In this environment, the portfolio's underweight stance in the energy sector proved favourable, although the underweight stance in some of the defensive sectors detracted from relative returns. Overweight stance in the mining sector detracted Concerns about demand resurfaced amid the debt problems in Europe and China's monetary tightening measures. This, in turn, put pressure on metal prices, leading to a decline in mining stocks Underweight in BP contributed to relative returns as clean-up costs soared
By the end of the quarter, shares in BP had fallen by 50% in value after the explosion on the Deepwater Horizon offshore drilling platform in the Gulf of Mexico on 20 April resulted in a large oil spill. Soaring costs of cleaning up the spill led to fears about future earnings. Holding in British Sky Broadcasting added value This satellite broadcaster was among the leading contributors as its shares rose sharply after it rejected a takeover offer from Rupert Murdoch's News Corporation in June. Earnings growth remains positive, driven by addition of new high-definition television customers, and the stock valuation is attractive relative to its growth prospects.
Fund Positioning
I continue to believe that valuations are supportive for equities and that they are looking particularly attractive compared to other asset classes. Large-cap stocks are looking anomalously cheap and they also possess strong balance sheets. Banks remains the largest overweight position, reflecting my confidence in their ability to deliver strong earnings growth and I believe they will be re-rated. I also favour companies with exposure to a corporate and emerging market customer base. Increased the holding in Lloyds Banking Group I have raised my conviction in Lloyds. I believe the stock was oversold due to heightened concerns over sovereign debt issues, which I consider to be overdone. Loss provisions appear to have peaked and I expect to see an improvement in return on equity. The stock is on an attractive valuation and the competitive environment within the banking sector is also positive. Added to Johnson Matthey I believe Johnson Matthey is an attractive stock on a structural as well as a cyclical basis, with demand for auto catalysts being driven by the need for cleaner emissions and the long-term trend of greater car demand. It also operates in an area with high barriers to entry, making the group a potential takeover target.
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Stanlib United Kingdom comment - Mar 10
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Tuesday, 29 June 2010
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Fund Manager Comment
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Market Environment
The UK stock market advanced during the quarter with the benchmark FTSE All Share Index returning 6.4%. Increasing optimism about the economic recovery and earnings growth helped equities to consolidate their gains from the previous three quarters. Cyclical stocks, which underpinned the rally in 2009, remained in favour, with mining stocks contributing the most to overall market returns. Nevertheless, there were indications that investors were becoming more discerning as the recovery gathered pace, preferring companies with higher growth potential and improving fundamentals, across a variety of sectors. Corporate activity was also in the spotlight during the quarter as Cadbury accepted a revised offer from Kraft Foods. However, concerns about sovereign debt problems in Europe dampened investor sentiment to an extent. On the policy front, the Bank of England's policymakers kept interest rates on hold at a record low of 0.5% and decided to pause its quantitative easing programme in February.
Fund Performance
The fund outperformed its benchmark over the quarter. Holdings in the banking sector contributed the most to fund returns as leading firms reported encouraging earnings and issued positive outlooks. The overweight stance in the mining sector also added value due to an anticipated rise in medium-term profits, supported by rising demand for metals. Holdings in Barclays and Lloyds Banking Group contributed Barclays beat expectations with profits over £11 billion in 2009, buoyed by the sale of its asset management arm Barclays Global Investors. Shares in Lloyds rose sharply after it said it expected to make a profit this year. Focus on companies with earnings growth potential amply rewarded Notable contributors included aerospace & defence group Rolls-Royce, which benefited from a record order book position in 2009, and education publisher Pearson, which made significant market share gains last year. Meanwhile, higher sales of its Vyvanse pill for attention deficit hyperactivity disorder boosted fourth-quarter results at pharmaceutical major Shire. A position in Prudential detracted following a period of strong performance Shares in this life insurance group retreated due to investor concerns that the price tag of $35.5 billion for its planned acquisition of troubled US peer American International Group's (AIG) Asian business may be too high.
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Stanlib United Kingdom comment - Dec 09
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Friday, 19 March 2010
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Fund Manager Comment
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I am positive about equity markets, however, I believe we are moving into more of a stock picking environment, which I believe will play well into Fidelity's strong research capability. I am overweight companies with strong franchises and I expect there to be a shift away from cyclical recovery plays to structural growth stories. I also expect that
companies with global revenues will perform better than those primarily reliant on US and UK exposure. I view the recovery in banking stocks as an attractive opportunity and believe the surviving companies will benefit from a less competitive environment. I am positive about the growth potential of technology related stocks.
Acquired Lloyds Banking Group
I believe the company is trading on an attractive valuation and that the downside from write ofts is limited. I also think the market is underestimating Lloyds' ability to write good business and the potential for attractive synergies to be gained from the HBOS deal.
Bought shares in BSkyB
BSkyB is a growth company with good prospects for margin improvement as broadband losses decline. Increasing demand for high definition and price increases will also boost margins. In addition churn levels have proven robust despite the impact of the recession. I am excited about 3D opportunities.
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Stanlib United Kingdom comment - Sep 09
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Monday, 30 November 2009
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Fund Manager Comment
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Over the quarter, the fund underperformed its benchmark. An underweight stance in banks, notably HSBC, detracted from relative returns. Positions in non-life insurance groups Catlin and Lancashire also hurt performance as investor attention moved to areas with more recovery potential. Outsourcing group Capita was a notable detractor, owing to worries that fewer contract wins and slower growth from existing services could impact earnings growth. Within the energy sector, the holding in Royal Dutch Shell held back returns as profits in the second quarter dropped due to the fall in oil prices from last year's highs. On a positive note, a position in International Personal Finance added value. Shares in this emerging market lender soared after it made a notable improvement in the second quarter as management actions and economic conditions restored profitability. Life insurer Prudential also contributed as it raised dividends following better-than-expected halfyear results, driven by a strong performance in Asian markets.
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Stanlib United Kingdom comment - Jun 09
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Friday, 18 September 2009
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Fund Manager Comment
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Over the quarter, the fund underperformed its benchmark.
The holding in publisher Pearson detracted from returns due to a weak short-term outlook on the US market for school publishing. Meanwhile, International Personal Finance held back performance; this emerging market consumer lender warned that 2009 results will be below estimates as a result of its underperforming Hungarian business. While stock selection was positive in the banking sector, an underweight stance in the sector, and HSBC in particular, undermined performance overall.
On a positive note, stock selection in the support services sector contributed; Insulation and building materials firm SIG added to returns after it completed a share placing and open offer, which strengthened its balance sheet. Recruitment group Michael Page also added value due to expectations that it will gain market share as the economic recovery gathers pace. Elsewhere, higher metal prices lifted the holding in India-focused miner Vedanta Resources.
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Stanlib United Kingdom comment - Dec 08
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Wednesday, 25 March 2009
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Fund Manager Comment
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Over the quarter, the fund outperformed its benchmark, mainly driven by strong stock selection.
An off-benchmark position in Nestle, the world's largest food company, added value as sales volumes remained robust, helped by growth in the emerging markets and its premium brands. Roche, the Swiss pharmaceutical firm, was another key contributor as solid growth prospects underpinned its shares.
An underweight in banks also supported relative returns amid lingering worries about capital adequacy. The mining sector underweight also helped relative performance in view of growing concerns that the economic slowdown would curtail demand for metals.
Elsewhere, investors favoured non-life insurers, encouraged by forecasts of higher premiums in 2009 and this benefited holdings in Catlin and Brit Insurance. However, certain positions in financials, such as Intermediate Capital, amezzanine finance provider, detracted, amid worries about increasing write-offs.
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Stanlib United Kingdom comment - Sep 08
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Monday, 1 December 2008
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Fund Manager Comment
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The fund outperformed its benchmark over the quarter.
Holdings in the support services sector, notably recruitment firms Michael Page International and SThree, were among the key contributors to returns. Shares in the former rose after it received a bid offer from Switzerland's Adecco in early August, and part of this position was sold into this strength, although the bid was later dropped. Meanwhile, a strong performance at its international business drove shares in Sthree.
An off-benchmark position in Nestle contributed due to an increased market preference for defensive stocks. First-half results, aided by price increases that offset rising input costs, beat expectations. Within the mining sector, a lack of exposure to Xstrata contributed strongly to relative returns, amid a decline in metal prices and due to the firm's more leveraged nature.
Conversely, an underweight in HSBC hurt relative performance, as investors perceived it to be better placed than peers to survive the current turmoil.
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Stanlib United Kingdom comment - Jun 08
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Monday, 22 September 2008
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Fund Manager Comment
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Over the quarter, the fund underperformed its benchmark.
An overweight in the support services sector detracted from returns. In particular, shares in recruitment consultant Michael Page slipped after it highlighted a slowdown in hiring among banks due to the credit market problems. Xchanging, a business process outsourcing firm, and SIG, an insulation and roofing supplier, were the other notable detractors within the sector, as these shares retreated after their strong performance in the first quarter. Elsewhere, an overweight in personal goods firms hurt returns due a weak outlook for consumer spending.
A position in lender HBOS, where valuations seem attractive, also proved detrimental amid further credit-related writedowns. Nevertheless, an overall underweight in banks contributed to relative returns. Holdings such as Royal Dutch Shell and John Wood in the energy sector also supported performance amid rising oil prices, which enhanced their earnings outlook.
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Stanlib United Kingdom comment - Mar 08
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Friday, 11 July 2008
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Fund Manager Comment
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An overweight in the support services sector enhanced returns amid expectations of robust earnings growth for firms such as SIG, Xchanging and Serco. An underweight in Vodafone also contributed to relative returns due to worries that proposed regulatory changes in Europe might impact the company's profits. Within the energy sector, a holding in gas producer BG Group proved beneficial, as the potential benefits from the firm's Brazilian oil field contributed to an upbeat outlook. Elsewhere, catering group Compass supported returns due to its new management team's focus on margins and the company's recent contract wins.
Conversely, an underweight in the mining sector was detrimental to relative returns, as takeover speculation supported stock prices. However, a potential US slowdown is expected to curtail demand for metals. A holding in supermarket group Tesco also detracted, reflecting a deteriorating consumer environment in the UK.
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Stanlib United Kingdom comment - Dec 07
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Thursday, 6 March 2008
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Fund Manager Comment
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BG Group made a substantial contribution to performance, as the energy firm's quarterly results surpassed estimates. The recent discovery of large oil reserves in Brazil is likely to enhance future earnings. An underweight position in banks also added value, while the holding in inter-dealer broking firm ICAP benefited from the higher volatility in financial markets.
The holding in personal goods company SSL International contributed to returns, as the restructuring of its European supply chain and new products should drive earnings.
Conversely, an overweight position in property market-related support services firms detracted from returns amid rising concerns about a slowdown in the real-estate sector. The underweight among mining companies also hurt performance, as the sector witnessed heightened bid activity. However, stock valuations appear stretched, while metal prices are expected to revert to their long-term average.
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Stanlib United Kingdom comment - Sep 07
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Tuesday, 27 November 2007
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Fund Manager Comment
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Over the quarter, the fund underperformed its benchmark.
Concerns regarding the US housing market indirectly had a negative impact on SIG and Wolseley. Exposure to the support services sector also impacted returns, as mid-caps stocks suffered from heightened market volatility.
At a stock level, the holding in Vanco proved unfavourable, as the virtual network operator faced cash flow issues after key contracts failed to materialise. An underweight position in the mining sector also weighed upon relative performance, amid expectations of continued strong global demand for commodities. However, the manager has reservations about the long-term sustainability of high metal prices.
Conversely, a cautious stance in banking supported relative returns, after rising interest rates and a tightening in credit market conditions dampened the outlook for the sector.
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Stanlib United Kingdom comment - Jun 07
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Thursday, 27 September 2007
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Fund Manager Comment
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During the quarter, the fund underperformed its benchmark.
Security selection in the software & computer services sector detracted from performance. In particular, shares in computer services provider LogicaCMG fell, as the company forecast a drop in full-year revenue in view of declining orders in the UK. Software firm Sage slipped, when its first-half profit declined due to the weakening of the dollar, which hurt earnings.
Additionally, a below-benchmark exposure to the mining sector hampered returns. Mining stocks gained amid rising metal prices and M&A speculation. Among oil & gas producers, the lack of exposure to a key player proved detrimental, as it benefited from rising oil prices.
On a positive note, below-benchmark exposure to the banking and the real-estate sectors worked well owing to concerns about further interest rate increases. Higher borrowing costs are expected to see slower demand for loans, while the growth in property prices is likely to moderate.
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Stanlib United Kingdom comment - Mar 07
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Thursday, 24 May 2007
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Fund Manager Comment
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During the quarter, the fund outperformed its benchmark index. An overweight position in support services proved beneficial to returns; Serco Group and SIG were among the top contributors. While the former recorded a robust growth in profits amid increased government spending in defence and infrastructure projects, shares of SIG were buoyed by acquisitions and higher demand in the UK and Germany. A low exposure to leading oil & gas producers, such as Royal Dutch Shell, contributed to returns. Despite an improvement in oil prices, concerns persisted about their earnings growth potential and lower production targets. Conversely, a lower allocation to the mining sector failed to support returns, as selected stocks rallied against a backdrop of ongoing share buyback programmes and a strong trend in metal prices. The underweight position in GlaxoSmithKline detracted from returns after the company released encouraging fourth quarter results.
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Stanlib United Kingdom comment - Dec 06
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Monday, 26 March 2007
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Fund Manager Comment
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During the quarter, the fund returned 2.4% in sterling terms, underperforming the benchmark index, which returned 3.9% over the same period. Overweight investments in the travel & leisure sector detracted the most from performance. In particular, an above-average exposureto leading online gaming companies, which came under pressure from US regulators during the period, eroded returns. Underweight exposure to the banking sector, especially high street lenders, proved detrimental, as hopes of an end to the rate tightening cycle rose amid a reduction in inflationary fears. Underweight exposure to oil & gas producers contributed the most to returns. Volatility in oil prices clouded the nearterm outlook for these companies, thus curtailing stock returns. A similar strategy towards mining firms also enhanced returns, as most stocks came under pressure due to the rising instability of metal prices. Additionally, higher exposure to support services companies, such as, Serco proved rewarding; robust first-half results enhanced the performance of these stocks.
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Stanlib United Kingdom comment - Sep 06
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Monday, 26 March 2007
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Fund Manager Comment
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During the quarter, the fund returned 2.4% in sterling terms, underperforming the benchmark index, which returned 3.9% over the same period. Overweight investments in the travel & leisure sector detracted the most from performance. In particular, an above-average exposureto leading online gaming companies, which came under pressure from US regulators during the period, eroded returns. Underweight exposure to the banking sector, especially high street lenders proved detrimental, as hopes of an end to the rate tightening cycle rose amid a reduction in inflationary fears. Underweight exposure to oil & gas producers contributed the most to returns. Volatility in oil prices clouded the nearterm outlook for these companies, thus curtailing stock returns. A similar strategy towards mining firms also enhanced returns, as most stocks came under pressure due to the rising instability of metal prices. Additionally, higher exposure to support services companies, such as, Serco proved rewarding; robust first-half results enhanced the performance of these stocks.
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Stanlib United Kingdom comment - Jun 06
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Tuesday, 28 November 2006
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Fund Manager Comment
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During the quarter, the fund returned -5.8% in sterling terms, underperforming the benchmark, which returned -1.6% over the same period. An overweight position in the software & computer services sector was the biggest detractor from overall returns. In particular, the holding in Sage Group, the UK's biggest accounting-software supplier, underperformed amid increasing competition. Elsewhere, an above-average exposure to support services undermined performance as concerns about lower demand for their products and services weighed on stock prices. A lack of exposure to companies in the gas, water & utilities sector detracted from returns, with certain stocks advancing thanks to a brighter outlook for earnings. Higher exposure to pharmaceutical companies proved beneficial. For example, Astra Zeneca was a major contributor to returns as the stock benefited from positive research on the group's cholesterol lowering drug Crestor. Shares in the general financial sector added to returns and the fund's lack of exposure to investment trusts also enhanced returns as a downturn in equity markets dampened investor sentiment.
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Stanlib United Kingdom comment - Mar 06
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Friday, 25 August 2006
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Fund Manager Comment
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Security selection in the software and computer services sector was the biggest detractor from relative returns; in particular, an overweight position in a hospital information technology company hampered performance. Elsewhere, a relatively large holding in Vodafone also had a negative effect on returns. Strong stock selection in the oil and gas, technology hardware, and utilities sectors boosted returns, and notable contributors included overweight positions in BG Group and insurer Prudential. In addition, the fund's lack of exposure to a major Dutch oil company had a positive impact on relative returns. As a result of the fund manager's bottom-up stock-picking approach, the fund's exposure to oil and gas and utilities rose over the quarter, while exposure to the travel and leisure sector was reduced. Exposure to the support services sector was marginally increased over the period, and support services remains the fund's largest position in sector terms, followed by pharmaceutical and biotechnology.
The fund's weighting in larger companies remained relatively unchanged; elsewhere, its exposure to smaller companies registered a slight increase. As small-cap stocks are relatively risky, the manager tends to favour those that are comparatively defensive in nature. The fund remained underweight the mining sector, given the manager's belief that commodity-related stocks are essentially a play on macroeconomic factors. Elsewhere, he remains wary of the UK consumer, and the portfolio remains underweight the banking and retailing sectors.
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Standard Bank United Kingdom comment - Sep 05
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Tuesday, 20 December 2005
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Fund Manager Comment
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During the quarter, the fund's overweight exposure to the IT hardware sector benefited returns, as selected companies performed well after announcing stronger-than-expected results. Companies have benefited from growing demand for microchips from the mobile phone industry.
The fund's holding in Standard Chartered boosted performance after investors were encouraged by better-than-expected results. In the oil & gas sector, the portfolio's holding in Mol Magyay Olaj Gazi, a Hungarian oil company with operations in Eastern Europe and Russia, performed particularly well.
However, the portfolio's underweight position in the mining sector detracted from returns, as companies in the sector continued to benefit from record commodity prices. The portfolio's overweight exposure to the leisure & hotels sector also hurt its returns; in particular, shares in gaming stocks slumped after PartyGaming warned of slower growth.
The fund manager remained optimistic about the pharmaceutical sector, and held significant positions in AstraZeneca and GlaxoSmithKline, believing that companies in this sector remain attractively valued and have significant scope to reduce costs and leverage balance sheets.
The fund retained its significant exposure to telecommunications, primarily in the pure mobile stocks such as Vodafone and O2. Elsewhere, the manager added to the fund's exposure to the support services sector, considering the industry's long-term prospects to be attractive.
The portfolio's underweight exposure to the oil & gas sector was extended as a result of the increased index weighting of Royal Dutch Shell, following its restructuring into a single new company. This was partly counterbalanced when the manager increased the portfolio's holding in BP. He also took profits in several oil exploration companies. Banks remained the portfolio's most underweight position, as the manager remained concerned about the high levels of UKconsumer debt.
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Standard Bank United Kingdom comment - Jun 05
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Thursday, 17 November 2005
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Fund Manager Comment
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During the quarter, the fund's overweight exposure to the information technology hardware sector boosted relative returns. Stocks rallied after investors were cheered by some better-than-expected results. Elsewhere, the fund's lack of exposure to general retailers proved rewarding.
However, the portfolio's underweight exposure to oil & gas stocks hurt its relative performance as stocks rallied as a result of higher oil prices. Furthermore, the fund's holdings in smaller oilexploration companies hindered returns after some disappointing drilling updates. Elsewhere, an overweight position in the hotels & leisure sector also detracted from fund performance.
Carlos Moreno took over management of the portfolio on 1 May. He has extensively repositioned the fund towards those companies that exhibit the greatest potential for earnings growth. Looking forward, he expects investors to reward those companies with superior profits growth.
Exposure to the leisure & hotels sector was significantly increased through the addition of selected online betting and casino companies. The fund manager maintained the portfolio's overweight stance towards aerospace companies as he felt that selected holdings within the sector would benefit from a cyclical recovery in
commercial aerospace expenditure. The fund manager was optimistic in his view of the media & entertainment sector, and he added to the fund's exposure. He considers the industry's long-term prospects are attractive, with companies likely to benefit from higher levels of corporate spending.
Banks became the portfolio's most underweight position as the manager was concerned about the high level of consumer debt. Within the sector, the portfolio is positioned towards those banks that have greatest overseas exposure. The portfolio manager reduced the fund's exposure to mining stocks, as he was concerned that commodity prices, which have rallied strongly over the last few years, might have peaked.
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Standard Bank United Kingdom comment - Mar 05
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Friday, 1 July 2005
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Fund Manager Comment
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Performance was hurt by disappointing stock selection during a period when macroeconomic factors, such as rising oil prices and interest rates, affected a variety of sectors. The fund's holdings among FTSE 100 and non-FTSE stocks detracted from returns; however, this was offset to some extent by robust stock selection among FTSE 250 and smaller companies.
At sector level, the fund's underweight position in mining stocks was detrimental to performance. Stock selection in the food producers & processors sector also detracted from returns. Areas that helped mitigate the fund's underperformance included exposure to the software & computer services sector.
During the quarter, the manager increased the number of holdings in the fund but maintained a concentrated portfolio of 72 holdings.
Exposure to the oil & gas sector moved from underweight to overweight and become the largest absolute sector weighting in the portfolio. In this respect, the fund manager purchased Eastern Europe oil companies. He also boosted the fund's holdings in the construction & building materials sector with a stake in the UK's largest homebuilder.
Exposure to the leisure & hotels sector was reduced.
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Standard Bank United Kingdom comment - Dec 04
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Thursday, 17 March 2005
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Fund Manager Comment
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Performance was boosted by robust stock selection during a mixed quarter for equities. In particular, the fund's holdings of larger stocks added value, as did exposure to medium-sized companies and non-benchmark stocks.
However, this was offset to some extent by unrewarding stock selection among smaller companies. Holdings in the leisure & hotels, telecommunications services, support services and utilities sectors proved beneficial. However, exposure to the oil & gas, and software & computer services sectors was detrimental to performance.
The fund manager maintained a concentrated portfolio of 68 holdings, with a large proportion of the fund invested in larger companies.
During the quarter, the manager diversified the portfolio by increasing exposure to non-UK stocks. The manager reduced the fund's exposure to the utilities sector. In particular, the fund's holding in Scottish Power was sold in favour of better investment opportunities.
The fund continued to have a high exposure to media & entertainment companies. The fund manager established a position in an electrical retailer with operations in the UK and France because of its attractive valuation relative to competitors such as Dixons, and future growth prospects.
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Standard Bank United Kingdom comment - Sep 04
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Monday, 29 November 2004
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Fund Manager Comment
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During the quarter, the fund returned 2.2% in sterling terms, underperforming the benchmark index, which returned 3.1% over the same period. Performance was hurt by somewhat disappointing stock selection during a mixed quarter for equities. At stock level, selected positions in the banks, oil & gas, and construction & building materials sectors detracted from performance. Meanwhile, holdings in the food producers & processors, telecommunications services, support services, and food & drug retailers sectors proved rewarding. The fund manager maintained a concentrated portfolio of 67 holdings, with a large proportion of the fund invested in FTSE 100 companies. He continued to find attractive opportunities in the utilities and financials sectors and, as a result, the fund's weighting in these sectors was increased. In addition, the fund had a high exposure to media & entertainment companies, while it had a low exposure to mining and general retailing companies.
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