Market Round-up
May was a more constructive month for equity markets, with broader sentiment continuing to recover against a still uncertain macroeconomic backdrop. Fears of stickier inflation remain, and the path towards a more accommodative environment seems to be drifting further on the horizon. Meanwhile, any second-guessing of the dominant AI capex narrative could see a sharp rotation in global stocks. Market leadership remains concentrated, with large US technology companies once again a key driver of returns, while pockets of improvement were also evident across Europe sectors.
Against this backdrop, robust, cash-generative, high-quality business remain out-of-favour, but this is down to investor sentiment rather than a change in underlying fundamentals. Encouragingly, earnings across our UK and global portfolios have remained strong, although the market has yet to reward our companies with re-ratings.
In this environment, we continue to emphasise businesses of enduring quality: those with strong competitive positions, robust balance sheets, and the capacity to compound value through a range of economic conditions.
Investment Views
This month, Ben P, portfolio manager of the Evenlode Global Income fund, discusses how from forthcoming mega-IPOs to the plumbing of payments and trading, market structures have evolved in a way that is shaping asset values themselves. Ben also analyses the how AI providers are grappling with how to feed their information in beneficial way, and the risks involved, alongside the investment thesis for Zoetis, and the more recently initiated position in Qualcomm.
Closer to home, Hugh and Chris M, portfolio managers of the Evenlode Income fund, discuss the growing disconnect between fundamentals and share prices, touching on how the combination of solid fundamentals and valuation de-rating has left the portfolio at its most compelling valuation since the fund’s launch in the 2009-11 period. In particular, they assess how key holdings such as Compass, Unilever and Howden Joinery, have fared in first quarter results, as well as the potential for a significant valuation re-rating of the portfolio over time.
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..