The majority of companies held in the portfolio have now reported first half earnings. These results have (broadly) been encouraging, with both sales and earnings recovering ahead of expectations. A recent example of this has been Marks & Spencer, where clothing and home sales have recovered faster than expected and therefore profit guidance for this year has been revised higher. Looking ahead, we continue to think that earnings expectations for the remainder of the year and into 2022 look conservative given, for example, the build-up of consumer savings during the course of the pandemic and the degree of cost savings that many companies have achieved. In our view, the prospect of further earnings upgrades, combined with a lower valuation relative to other developed equity markets is a supportive backdrop for UK equities.

We have been encouraged by the dividend recovery seen this calendar year, with particularly strong dividend growth from the banking, mining and energy sectors. There continues to be a portion of the portfolio (such as companies exposed to hospitality and travel) that has not yet returned to paying a dividend. As the domestic and global economy continues to recover, we would expect these remaining companies to return to paying dividends in future years.

August was a relatively quiet month for transactions within the portfolio, but we added to a number of existing holdings including Tesco, life insurer Chesnara and Anglo American. A new small position was established in law firm DWF.



References made to individual securities should not constitute or form part of any offer or solicitation to issue, sell, subscribe, or purchase the security. Janus Henderson Investors, one of its affiliated advisors, or its employees, may have a position mentioned in the securities mentioned in the report.