For financial professionals in the UK

Lowland Investment Company Fund Manager Commentary – March 2022

Laura Foll, CFA | Janus Henderson Investors
Laura Foll, CFA

Laura Foll, CFA

Portfolio Manager

James Henderson

James Henderson

Portfolio Manager

22 Apr 2022
3 minute read

During March the UK equity market made modest gains, with the FTSE All-Share rising 1.3% on a total return basis. Beneath this modest market rise the trends seen calendar year to date continued. Energy and basic materials performed well on rising (albeit volatile) commodity prices such as oil, while consumer discretionary underperformed in anticipation of the upcoming squeeze on household real disposable income. In this backdrop the Trust modestly underperformed its FTSE All-Share benchmark, with its net asset value rising 1.1% relative to a 1.3% rise in the All-Share. During the same time period the Trust’s AIC UK Equity Income peer group rose 2.6%.

Among the largest contributors to relative performance during the month was vehicle hire firm Redde Northgate, which reported trading ahead of market expectations for its current financial years along with a share buyback. We reduced the position following this news for portfolio balance reasons. Medical equipment supplier Convatec was also among the good performers – rising input costs (which are not unique to Convatec) had led to concerns that margins would fall in 2022, however the company guided to margins being flat to slightly up and this was enough for the share price to recover.

The weakest actively held performers during the month tended to be retailers, for example Kingfisher (the owner of brands such as B&Q and Screwfix) and Halfords. Kingfisher guided to earnings for the year ahead being approximately in line with expectations, however there continues to be a concern that consumer spending will markedly deteriorate as the year progresses.  While Halfords did not report on trading during March the share price fell due to the same concern. Our approach to investing in retailers continues to be that we favour specialists that are market leaders – both Kingfisher and Halfords fall into this category. In our view these businesses have attractive scope for sales and earnings over the medium term, however we cannot predict short term trading (it is unclear to what degree consumers will draw down on pent up savings during the pandemic or will curtail spending).

It is encouraging to see the UK equity market rise despite weakness in the bond markets (with the UK 10 year gilt yield, for example, continuing to rise during March). The UK equity market did not materially re-rate when bonds were performing well, therefore equities decoupled from bonds several years ago. It is, nevertheless, encouraging that this link appears to remain broken as bond yields rise. The reason, in our view, is that the UK equity market remains lowly valued relative to overseas peers. We continue to see evidence of this coming through in takeover activity within the portfolio – this month there was an agreed bid for financial holding Randall & Quilter.

Source: Bloomberg as at 31/03/2022

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.