Market Round-up
July was a strong month across the Evenlode portfolios, as investors returned to traditional quality sectors. In the last week both the S&P 500 and Dow Jones closed at record highs, supported by robust corporate earnings. Across the pond, European indexes also hit all-time highs, while we also saw more signs of a rally for undervalued quality companies in the UK, as oversea buyers continued their spending spree.
Recent results from AI-related businesses may have helped ease some concerns around demand and growth, while lower crude prices and declining Treasury yields provided additional support as hopes grew for progress on geopolitical tensions. But beneath the surface, we are seeing the early stages of a broader market rotation. Leadership is beginning to extend beyond the small group of mega-cap technology names that have driven returns in recent years. Investors are increasingly focusing on fundamentals such as earnings quality, balance sheet strength, and cash generation. Hyperscalers will have to defend their AI capital expenditure more than ever, as they burn through free cash flow.
This shift creates a more balanced opportunity set. While AI innovation will remain a key long-term driver, we believe the next phase of market performance will be shaped by companies delivering real underlying value. Our portfolios remain positioned to benefit from this transition, combining exposure to structural growth themes with disciplined investment in businesses supported by strong fundamentals.
Investment Views
This month, Ben Peters, portfolio manager of the Evenlode Global Dividend fund, discusses how the market has essentially bifurcated into ‘AI’ and ‘everything else’, and with the portfolio being weighted toward the latter, the strong bid for portfolio companies they are seeing as capital appears to have swung from one side of the equation to the other. Ben also evaluates the fund’s top 20 holdings, explaining why most could approximately double over five years with reasonable assumptions.
Closer to home, Hugh Yarrow, portfolio manager of the Evenlode UK Select fund, takes us through earnings season and what this means for the portfolio, as companies (and customers) get better at managing through the uncertainties posed by a ‘new normal.’ Hugh also shares updates on a range of holdings including Rotork, Unilever and Clarkson, following interim results and conversations with management.
Important information
Issued by Evenlode Investment Management Limited (Evenlode). Evenlode is authorised and regulated by the Financial Conduct Authority, No. 767844.
Whilst the funds Evenlode acts as investment manager for are available to retail investors via third party providers, please note that Evenlode do not have permissions from the FCA to deal directly with retail clients and the information provided in this newsletter and on the Evenlode website is for information purposes only. If you are not an investment professional you may still wish to visit the Evenlode website to find out information about Evenlode and the funds we manage but we recommend that if you wish to obtain advice regarding the suitability of the Evenlode ICAV for you, you should contact a financial adviser. Applications to invest in any fund referred to on the Evenlode website can only be made through a third party and must only be made on the basis of the offering documents relating to the specific investment.
This newsletter is neither directed to, nor intended for distribution or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. The sale of shares of the fund may be restricted in certain jurisdictions. In particular shares may not be offered or sold, directly or indirectly in the United States or to U.S. Persons, as is more fully described in the Funds Prospectus.
Please note, any views represent the opinions of the Evenlode Team as at the time of writing and do not constitute investment advice. Where opinions are expressed they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. This newsletter is not intended as a recommendation to invest in any particular asset class, security or strategy. The information provided is for illustrative purposes only and should not be relied upon as a recommendation to buy or sell securities. Current forecasts provided for transparency purposes, are subject to change and are not guaranteed. Every effort is taken to ensure the accuracy of the data used in this document but no warranties are given.
For full information on the Evenlode ICAV, including fund risks and costs and charges, please refer to the Key Information Documents, Annual & Interim Reports and the Prospectus, which are available on the Evenlode website. Recent performance information is shown on factsheets, also available on the website. Past performance is not a guide to future returns. Fund performance figures are shown inclusive of reinvested income and net of the ongoing charges and portfolio transaction costs unless otherwise stated. The figures do not reflect any entry charge paid by individual investors.
The Evenlode ICAV sub-funds are subject to normal stock market fluctuations and other risks inherent in such investments. The value of your investment and the income derived from it can go down as well as up, and you may not get back the money you invested, you should therefore regard your investment as long term. As focused portfolios of between 30 and 50 investments, the Evenlode ICAV sub-funds carry more risk than funds spread over a larger number of stocks. The Evenlode ICAV sub-funds have the ability to invest in derivatives for the purposes of EPM, which may restrict gains in a rising market. Investments in overseas equities may be affected by changes in exchange rates, which could cause the value of your investment to increase or diminish..