For financial professionals in the UK

Fund Manager September 2021 Commentary – Lowland Investment Company

Laura Foll, CFA

Laura Foll, CFA

Portfolio Manager

James Henderson

James Henderson

Portfolio Manager

8 Oct 2021
3 minute read

September was a volatile month, where a relatively subdued -1.0% return in the FTSE All-Share Index (on a total return basis) masked some large underlying moves, driven by rising energy prices and rising bond yields. For example, the rise in the oil price, as demand recovers and inventories are gradually drawn down following the pandemic, led to both Royal Dutch Shell and BP rising approximately 15% on a total return basis during the month (a very large move considering the scale of these companies)1. An even larger move upwards in the UK gas price meant that Serica Energy, a North Sea oil & gas producer (exposed primarily to gas), was the largest individual contributor to performance in the portfolio.

One new (small) position was established in September in wealth management firm, Brooks Macdonald. In recent trading updates, it has returned to modest net inflows, with particularly good growth in their ‘managed portfolio services’ business (where they provide portfolio management services to independent financial advisors). In our view, this portion of the business has further scope to grow.  We also added to a number of existing holdings, including Finsbury Foods, Chesnara, Headlam and Halfords.

Following a good earnings recovery in the first half of 2021 as economies recovered from the pandemic, the second half of the year is likely to be more difficult, driven by cost pressures and supply outages. This is creating a challenging operating environment for businesses, as while order books in many cases continue to be strong, companies are struggling to fulfil these order books.  Therefore, the conversion to sales and earnings is (in some cases) likely to be slower than originally anticipated. While this is likely to cause some unpredictability to earnings in the second half of the year, we continue to see this as a delay on the route to earnings recovery rather than a structural impairment to future company earnings. We have therefore continued with the Trust’s existing positioning, which includes a significant weighting in the industrials sector.



1 Bloomberg, as at 30th September 2021

Volatile Expand

The rate and extent at which the price of a portfolio, security, or index, moves up and down. If the price swings up and down with large movements, it has high volatility. If the price moves more slowly and to a lesser extent, it has lower volatility. It is used as a measure of the riskiness of an investment.

Bond yields Expand

The level of income on a security, typically expressed as a percentage rate. Note, lower bond yields mean higher prices and vice versa.

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.