For financial professionals in the UK

Lowland Investment Company Fund Manager Commentary – January 2022

James Henderson

James Henderson

Portfolio Manager

Laura Foll, CFA

Laura Foll, CFA

Portfolio Manager

21 Feb 2022
3 minute read

Laura Foll, Co-Portfolio Manager of Lowland Investment Company, delivers an update on the Trust, highlighting the key drivers of performance, recent portfolio activity, and provides an outlook for the UK equity market.

At the sector level, the Financials position was the largest contributor to performance, with both insurers (such as Direct Line and Hiscox) and banks performing well. These companies are yet to report full year earnings but there is an expectation that on a medium-term basis their returns will improve in a higher interest rate environment. The telecoms sector (specifically Vodafone and BT) also performed well as they are aiming to put through price rises at least in line with inflation and there is hope for consolidation in the industry. At the opposite end of the spectrum some of the earlier stage, smaller companies held in the portfolio, such as Ilika, de-rated on little company specific news but as a result of the broader market rotation.

From a transaction’s perspective, one new position was purchased during the month in furniture retailer DFS. While we are conscious of the pressure on real disposable incomes currently taking place (with nominal wage growth below the rate of inflation), DFS is a UK market leader with a good order book and its balance sheet has been materially improved during the course of the pandemic.

While the start of 2022 has been volatile from an equity market perspective, it is interesting to note the outperformance of UK equities relative to other markets. For example, while the FTSE All-Share fell 0.3%, the S&P 500 Index fell 4.5% and the MSCI World fell 4.6% (all figures total return, in Sterling)2 For a number of years, the UK equity market has traded at a valuation discount to other global equity markets (including on a sector adjusted basis). Therefore, we have long held the view that this valuation gap would (at some stage) converge to nearer its historic average. While one month is clearly too short a timeframe to pronounce the start of a trend, it is nonetheless encouraging.

Discrete year performance % change (updated quarterly) Share Price NAV
31/12/2020 to 31/12/2021 16.3 23.9
31/12/2019 to 31/12/2020 -11.0 -15.1
31/12/2018 to 31/12/2019 14.2 16.9
29/09/2017 to 31/12/2018 -11.3 -15.0
30/12/2016 to 29/12/2017 16.5 16.2
All performance, cumulative growth and annual growth data is sourced from Morningstar.


1 Source: Bloomberg as at 31 January 2022

2 Source: Bloomberg as at 18 February 2022

Glossary Expand

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.
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