After a good run, the enthusiasm of the market appears to be fading somewhat. Economic recovery is on track, but we face a tricky inflation conundrum and, of course, concerns over the latest virus variant as we ‘open up’ again. The first quarter of 2021 had seen a revival for the more economically sensitive, or cyclical, sectors and a move away from the more ‘defensive’ and growth sectors; this begun to unwind over the second quarter.

In terms of transactions undertaken, the second quarter of 2021 was a quieter period for the Fund after the strategic moves of the previous six months, which had seen us moving away from oil stocks altogether, along with a number of smaller companies. The unit price also went ‘ex’ the half-year dividend, which was paid at the end of May, the total return for the quarter was 5.4% (‘B’ accumulation units). The pie chart reflects the continuing move towards bigger companies, though this is now largely complete, see pie chart right.

The bulk of purchases during the period were additions to existing holdings, many of which feature in the Top 15 holdings, right. Amongst the major companies we added to were: Aviva, Reckitt Benckiser, Smith & Nephew and Unilever. On the opposite tack, we have been reducing Primary Health Properties, trading at a significant premium to the value of its underlying assets, in favour of a new holding in Land Securities, which is trading at a discount.

We have also been active in the mid-cap area, twice adding to the holding in Bellway, which reported good figures for new housing reservations, and to Rathbone Bros. We continue to like DS Smith, the cardboard packaging company (actually a FTSE 100 company, albeit in the bottom 10%), which reported full-year results during the quarter, and added to this holding in April. We sold the remainder of the holding in HICL Infrastructure, switching to an increased holding in GCP Infrastructure, which look rather better value. Virgin Money UK 2.625% stock due in 2031 is a new holding in fixed interest, maintaining the overall weighting in the area at 10%.