October was a decent month for the Trust’s performance. Since early September, we have seen a material outperformance of ‘value’ when compared to ‘growth’. It is pleasing to us that we have managed to outperform in this environment given our long standing bias towards good quality, growing businesses. Our strong performance during the month was largely driven by SAP, Cellnex and Getlink. Conversely, our higher quality positions generally struggled and the worst performers included Philips, DSM and Deutsche Boerse.

During the month, we managed to find a number of interesting new ideas to invest in, the most notable of which were STM and Atos. STM, the French/Italian-listed semi-conductor company, is well positioned in autos end markets and has market-leading technology in Silicon Carbide, microcontrollers and imaging. We expect strong growth and margin progress over the medium term. Atos, the French IT services company is well placed to see medium term growth, especially in its attractive cyber security business. However, the market is concerned that the shift towards cloud computing will erode its infrastructure business; we share these concerns, but see a more benign outcome than priced in by investors. The business is extremely attractively valued in our view.

To make way for these new ideas, we sold a number of our higher quality businesses where we have been finding the valuation levels harder and harder to justify. We sold positions in L’Oreal, Brenntag and Philips for example.

We are confident in our positioning and will continue to retain balance in our exposures by considering two types of business for investment; those where we see high and sustainable returns that are undervalued by the market and those companies where we can see a material improvement in medium term business prospects.