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Fund manager February commentary – Lowland Investment Company plc

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Laura Foll, CFA

Laura Foll, CFA

Portfolio Manager

James Henderson

James Henderson

Portfolio Manager

12 Mar 2020
2 minute read

It was a very difficult month for the Trust on both an absolute and relative basis. The Trust’s net asset value fell 11.6% on a total return basis while the FTSE All-Share benchmark fell 8.9%. Coronavirus is causing a demand impact (on demand for flights, luxury goods, beverages etc) and a supply impact as facilities are shut in China and in some cases Northern Italy. We have already seen several companies held within the portfolio materially lower earnings expectations due to the impact of the virus – examples include Vitec (which produces ~50% of products either in China or Northern Italy, it is also exposed to the Tokyo Olympics), Ricardo (which can’t move its consultants around in China, with a large drop through impact on profitability) and IAG (which has withdrawn 2020 guidance on the uncertain demand outlook). We will see further similar downgrades in the coming weeks and the market is moving in anticipation of further downgrades.

Looking at the performance of the portfolio during the month, the largest detractors from performance at the sector level relative to the benchmark were the overweight positions in Industrials and, to a lesser extent, Financials. Several of the small companies held also moved materially including Ten Entertainment (presumably on concern that people will defer their trip to the bowling alley if the virus becomes widespread in the UK), Churchill China (exposed to the restaurant industry globally) and Senior (which attempted to quantify the impact of the 737 grounding on this year’s earnings).

Buying activity so far has been fairly limited. Since the market decline accelerated towards the end of February we have added a small new position in Lloyds (0.8% at month end) and added to the existing holding in M&G (received as a spin out from the holding in Prudential). The holdings in Avon Rubber and Helical have been reduced on better valuation opportunities elsewhere.

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.


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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.
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  • 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.
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  • Active management techniques that have worked well in normal market conditions could prove ineffective or negative for performance at other times.
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