November Commentary: Lowland Investment Company

16/12/2016

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​November was a dull month for the Trust in absolute terms although it fared better than the broader UK market. The net asset value rose 0.1% on a total return basis relative to a 1.6% fall in the FTSE All-Share.

 
Following the Autumn statement from Philip Hammond in which budgetary targets were relaxed, UK government bond yields continued to rise. This rise in bond yields drove the ongoing rotation in the market away from defensive sectors such as consumer staples and telecoms, towards more cyclical sectors such as industrials and banks.
 
The largest individual contributor to performance was Hill & Smith, which rose following encouraging third quarter results as well as the expectation that infrastructure spend will increase globally. Hill & Smith are well placed to benefit from rising infrastructure spend given their exposure to road crash barriers and messaging signs.
 
The largest detractor from performance was Cape, which provides services (such as scaffolding) primarily to the energy industry. While the recent trading update was positive, there is heightened litigation risk arising from historic asbestos claims.
 
During the month we continued to reduce positions that we see as approaching fair value, including Weir Group, Scapa and Greencore. We added to the existing position in Royal Dutch Shell as they are making good progress on cost reductions and therefore bringing down the oil price at which they can break-even on a cash flow basis. They also pay an attractive dividend yield, which given the progress on cost cutting and rise in the oil price is looking more sustainable.



Past performance is not a guide to future performance. 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.


Important information

Please read the following important information regarding funds related to this article.

Lowland Investment Company plc

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.

Past performance is not a guide to future performance. 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. Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances or the law change.

Nothing in this document is intended to or should be construed as advice. This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment.

Issued in the UK by Janus Henderson Investors. Janus Henderson Investors is the name under which Henderson Global Investors Limited (reg. no. 906355), Henderson Investment Funds Limited (reg. no. 2678531), Henderson Investment Management Limited (reg. no. 1795354), AlphaGen Capital Limited (reg. no. 962757), Henderson Equity Partners Limited (reg. no.2606646), Gartmore Investment Limited (reg. no. 1508030), (each incorporated and registered in England and Wales with registered office at 201 Bishopsgate, London EC2M 3AE) are authorised and regulated by the Financial Conduct Authority to provide investment products and services. Telephone calls may be recorded and monitored.

Specific risks

  • Some of the investments in this portfolio are in smaller companies shares. They may be more difficult to buy and sell and their share price may fluctuate more than that of larger companies

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