The Index rose 2% for the quarter, with the fund -2.6%. 

After a disappointing 2025, the fund had started the quarter broadening and diversifying across sectors and end markets. We redefined and reapplied how we measure ‘quality growth’ and used the market volatility to invest in nine new companies, and sold four, making 70 trades over the quarter. 

Upon the market upheaval, we re-invested into miner Rio Tinto, who operate iron ore mines in Australia and rapidly expanding into Copper to meet energy transition demand. We also initiated a position in defence firm BAE Systems, who had sold off following a strong run. 

Pre-war in Iran, the AI trade was still playing out in full flow and we added to RELX, Experian and LSEG. These names had been hit as Anthropic’s latest version of Claude was announced, exacerbating fears that LLMs will destroy these businesses revenue streams. However we believe that these firms (who all own their own data and IP) hold the future power when it comes to harnessing the utility of AI. Conversely, we sold Sage as we believe their economic moat not to be as strong as it once was. Likewise, with Trainline who we still believe to be a great business, but opportunities elsewhere and continued regulatory pressure brought us to closing the position.

We sold housebuilder, Berkeley Group (fortunately pre-profit warning) as thought that the move in yields (the ten year was >5%) would create even more pressure for homebuyers in the London and South East, where they primarily operate. We used the proceeds to invest in Great Portland Estates (one of the most active Central London REITs) and in Segro, the owner and developer of big warehousers and increasingly data centres across the UK and Europe. 

We were very fortunate (and saddened) to have two major takeovers from the fund this quarter, both as surprising as each other. Lloyds of London underwriter Beazley announced an all-cash takeover by Zurich Insurance Group at a 60% premium to the previous days trading. We have been slowly exiting to fund positions elsewhere and invest in their competitor Hiscox. Additionally, and even more surprisingly, family-owned Schroders were taken over by mega US-pension fund TIAA (backed by investment manager, Nuveen) at a premium of just shy of 30%. Post dividend payment we exited the position and used proceeds to rebuild a stake back in Barclays. 

Halma and Diploma continued to lead the funds performance and we carried on top-slicing the positions. They remain key holdings for the fund. We used proceeds to top up Coca-Cola EuroPacific and Games Workshop who had both been hit during the conflict. Finally we established a position in Tesco and Genus who remain best-in-class in their fields and further differentiate the portfolio and the make up of its revenue streams.  

We are continuing to build out the portfolio, broadening and diversifying the constituents which should lead to a strengthening of returns across market cycles. We will use opportunities of volatility to swiftly act and redeploy capital where we see better opportunities elsewhere.  
 

The above article has been prepared for investment professionals. Any other readers should note this content does not constitute advice or a solicitation to buy, sell, or hold any investment. We strongly recommend speaking to an investment adviser before taking any action based on the information contained in this article.

Please also note that the value of investments and the income you get from them may fall as well as rise, and there is no certainty that you will get back the amount of your original investment. You should also be aware that past performance may not be a reliable guide to future performance.