To cherry-pick just a few examples, good and bad (none of which we are shareholders in):

• Deliveroo: shares were the ‘hot’ IPO of last summer, coming to market at 250p and quickly rocketing to 400p in August 2021. Since the peak shares have fallen a whopping 75%, now trading below 100p.
• ASOS: shares hit a post-COVID high of 6000p, also in the summer of ’21, today one can purchase shares almost 80% cheaper.
• BP: shares have more than doubled in 18 months on soaring oil prices. The stock market seems to have largely ignored that six months ago they were still the largest external shareholder in Rosneft, the Russian state oil giant and had poured billions of pounds into Siberian ‘money heaven’.
• British American Tobacco: shares are back in vogue, up 40% in six months and leading UK markets. As a cheeky aside, Capital Group, who ‘believe ESG is key to successful investing’ are the largest shareholder of BATS.

Against this backdrop, our quality growth businesses remain out of favour on the stock market, as concerns about valuing these shares in a higher rate environment linger. We have been steadily adding to our core holdings throughout the year and in May increased our investments in industrial businesses Ashtead, Diploma and Spirax-Sarco Engineering, used car platform Auto Trader and Gregg’s who need no introduction. It is incredibly rare being able to add to such a wide range of outstanding businesses trading on valuations as attractive as they are today. Here are a few cases to illustrate this point:

• Diploma: we have been shareholders in Diploma since June 2015 and had seen shares triple in value in the subsequent years. Such was the positive run in Diploma shares, that we did not have the opportunity to add to our shareholding for five years after initial investment, until COVID sent all shares tumbling. Here we are another two years on from the COVID-selloff and the market has offered us another chance to build our position and we are happily taking this.
• Spirax-Sarco: we first invested in a mere 19 years ago. It was not until the financial crisis of 2009 that we added to this position meaningfully again and the same during COVID. Such has been the success of the business that shares have for long periods of time traded at a substantial premium and periods of weakness, such as now, have been the exception to the rule and proved attractive points to buy more shares.
• Auto Trader: first came to market in 2015 and shares have generally enjoyed a steady increase in value, reflecting strong business performance. We were not investors at IPO and watched jealously from the side-lines as shares kept re-rating beyond our target price. It took COVID for shares in Auto Trader to finally drop below our levels and this is when we became shareholders. Once again, we are adding to Auto Trader and now consider this a core position in the Fund.

Markets continue to prove nervous and the uncertain global backdrop shows no immediate sign of improving. In such times we are sticking to our core investment process of focusing on the underlying businesses that we are investing in. These are unique businesses with proven track records of resilience and growth through the toughest times. These are times to be patient and to trust that quality will out.

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 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.