January was a mixed month for the Trust as some holdings came back in share price terms. The largest individual detractor was Carclo, following news that its touch-screen technology will grow slower than initially expected. Over the medium term we continue to believe that the company can grow substantially.
Despite strong domestic economic data, UK equity markets fell during January as a result of worries surrounding emerging markets. For companies held within the Trust, strong fourth quarter UK GDP data and a reduction in the unemployment rate will ultimately prove more important for sales and earnings growth than emerging market fluctuations, and therefore we remain comfortable with the Trust’s positioning in high quality manufacturing companies.
Buying and selling activity remained low this month as we continue to run with our winners. We added to the position in pharmaceutical firm AstraZeneca, as it is taking active steps to improve its research and development pipeline, which over the long term should result in earnings and dividend growth. The positions in Irish insurer FBD Holdings and Interserve were trimmed; we continue to see value in these names but feel it is prudent to take profits following large price moves.