The global equity market moved further upward in June, with the benchmark MSCI World Index up by +2.8% in sterling. The fund in comparison saw less exuberance with modest gains. Within the market the Information Technology sector continues to be the driving force, with large contributions from companies centred around the theme of artificial intelligence (AI). The sector was the biggest contributor to the fund’s performance, albeit at a lesser rate compared to the market. Information Technology was also the biggest component of relative underperformance when compared to the benchmark. Consumer Staples companies were relatively weak for the portfolio, with the main driver being a negative market reaction toward French listed businesses L’Oréal and Pernod Ricard following the announcement of snap elections in the country. These businesses are very internationally diversified and whilst the result of the election is of great significance for European and global geopolitics, we are not unduly concerned about their effect on the long-term prospects of these companies. This dynamic can be seen globally, with the medium-term ramifications of elections in the UK, US and elsewhere being something of an imponderable.

On the face of this, and through a period of relatively weak performance in market terms for the fund, we look to the fundamental characteristics of the portfolio to guide us. In recent investment views (available at https://evenlodeinvestment.com/news) we have examined the fundamental cash flow and dividend-generating ability of the companies in the portfolio, as well as the valuations at which the collection of businesses trades at in the market. With consistent dividend growth a key aim of the strategy, it is encouraging that this is now being achieved post-pandemic being backed by solid cash generation from enterprises that sell products and services which are overwhelmingly repeat purchase in their nature. The market excitement over recent months and, indeed, years has been centred around more cyclical industries and the AI investment boom, but the quieter underlying performance of the companies in the portfolio is providing a solid platform for future growth at attractive valuations.