For financial professionals in the UK

Fund Manager December 2021 Commentary – Lowland Investment Company

Laura Foll, CFA

Laura Foll, CFA

Portfolio Manager

James Henderson

James Henderson

Portfolio Manager

20 Jan 2022
3 minute read

UK equity markets rose strongly during December following growing evidence that the Omicron variant of Covid-19 is less severe (with, for example, a lower estimated hospitalisation rate). There is, therefore, potentially less requirement for trading restrictions beyond the UK government’s existing ‘plan B’ measures. During the month, the Trust’s net asset value rose 5.8%, while its FTSE All-Share benchmark rose 4.7% and AIC UK Equity Income peer group rose 4.5% (all figures on a total return basis).
Among the best performers during the month was flexible vehicle hire firm Redde Northgate, following encouraging interim results where profit before tax for the full year was guided to being ‘at least’ in line with market expectations. Redde Northgate earnings have benefitted from several factors, including the growth in online shopping, resulting in increased demand for van hire for last-mile delivery. Also among the good performers in December was corporate services firm K3 Capital, following reporting results in line with market expectations. Detractors from performance during December were largely ‘underweight’ positions in large benchmark stocks that performed well, including AstraZeneca and HSBC.

Turning to transactions during the month – the position in retailer Halfords was added to in a placing to fund the acquisition of a national chain of garages. In our view, the acquisition looks complementary to their existing Autocentres business, with the potential for significant synergies from the combination (such as enhanced purchasing power and removing duplicate costs). We also added to the position in Kingfisher (the owner of brands including B&Q and Screwfix). In our view, Screwfix has the potential for good future earnings growth, both within the UK and in countries such as France.

Looking ahead into 2022, there are several reasons to be optimistic about the UK backdrop. Consensus estimates real UK economic growth in ’22 of 4.8%, and the UK is starting the year with a low unemployment rate and a better than historic average household balance sheet (which should give households more of a savings ‘buffer’ to counteract rising prices). The UK equity market also enters 2022 at a valuation (measured by 12-month forward price/earnings) which is not out of line with its own historic average and is lower than other developed equity markets (particularly the US). This is not to say there are not risks, the most material in our view being persistent high inflation, which brings alongside it the risk of central bank policy error and pressure on household real disposable incomes.

Discrete year performance % change (updated quarterly) Share Price NAV
30/09/2020 to 30/09/2021 53.3 55.1
30/09/2019 to 30/09/2020 -24.6 -24.8
28/09/2018 to 30/09/2019 -11.9 -9.6
29/09/2017 to 28/09/2018 4.2 3.0
30/09/2016 to 29/09/2017 16.4 17.0
All performance, cumulative growth and annual growth data is sourced from Morningstar.


1Source: Bloomberg as at 18/01/2022

Glossary Expand

Forward price/earnings – Forward price-to-earnings (forward P/E) is a version of the ratio of price-to-earnings (P/E) that uses forecasted earnings for the P/E calculation.

Inflation – The rate at which the prices of goods and services are rising in an economy. The CPI and RPI are two common measures.

Net Asset Value (NAV) – The total value of a fund’s assets less its liabilities.

Valuation – Metrics used to gauge a company’s performance, financial health and expectations for future earnings eg, price to earnings (P/E) ratio and return on equity (ROE).

These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. References made to individual securities do not constitute a recommendation to buy, sell or hold any security, investment strategy or market sector, and should not be assumed to be profitable. Janus Henderson Investors, its affiliated advisor, or its employees, may have a position in the securities mentioned.


Past performance does not predict future returns. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.


The information in this article does not qualify as an investment recommendation.


Marketing Communication.






Important information

Please read the following important information regarding funds related to this article.

Before investing in an investment trust referred to in this document, you should satisfy yourself as to its suitability and the risks involved, you may wish to consult a financial adviser. This is a marketing communication. Please refer to the AIFMD Disclosure document and Annual Report of the AIF before making any final investment decisions.
    Specific risks
  • If a Company's portfolio is concentrated towards a particular country or geographical region, the investment carries greater risk than a portfolio that is diversified across more countries.
  • Some of the investments in this portfolio are in smaller company shares. They may be more difficult to buy and sell, and their share prices may fluctuate more than those of larger companies.
  • This Company is suitable to be used as one component of several within a diversified investment portfolio. Investors should consider carefully the proportion of their portfolio invested in this Company.
  • Active management techniques that have worked well in normal market conditions could prove ineffective or negative for performance at other times.
  • The Company could lose money if a counterparty with which it trades becomes unwilling or unable to meet its obligations to the Company.
  • Shares can lose value rapidly, and typically involve higher risks than bonds or money market instruments. The value of your investment may fall as a result.
  • The return on your investment is directly related to the prevailing market price of the Company's shares, which will trade at a varying discount (or premium) relative to the value of the underlying assets of the Company. As a result, losses (or gains) may be higher or lower than those of the Company's assets.
  • The Company may use gearing (borrowing to invest) as part of its investment strategy. If the Company utilises its ability to gear, the profits and losses incurred by the Company can be greater than those of a Company that does not use gearing.