The objective of the JOHCM UK Dynamic Fund is to achieve long-term capital growth. The Fund will aim to achieve this objective mainly through investments primarily drawn from companies listed on either of the two primary markets of the London Stock Exchange: the main market and AIM. At least 75% of the Fund’s assets will, at all times, be invested in equity securities of companies domiciled or exercising a predominant part of their economic activity in the United Kingdom. On occasion the Fund may utilise this position to invest a proportion of its assets in equities listed on a recognised exchange outside the UK. Investment will be made primarily in equity securities which are readily marketable, but investments will also be made in equity securities of smaller companies which can be more lightly traded. The portfolio is likely to be fairly concentrated with the Fund typically holding equity interests in between 35 and 50 different companies.

Back in the mists of time, August was a month for reflection and relaxation, a process very much aided by genteel and suitably accommodating markets. Those days have long gone. Each passing year seems to bring an increasing velocity of newsflow, volatility and a frenzied rush to release results before the sunbeds get packed away for the season. Evidence suggests this does not necessarily make for a more efficient market but sadly it has become the practical reality in what is an increasingly hyper connected world. This time around, a Nasdaq mini plunge caught the eye, allied to persistent weakness in midcap and cyclical names at the expense of staples and defensives, the resurgence of the latter reflected increasing fears of a US led global slowdown. Such a distortion to global allocations has its distractions, but a pleasing side effect is the plethora of mispriced opportunities it leaves elsewhere, and they are no more pronounced than in the UK.

Per the market mix impact described above, defensively orientated sectors were strong over the month. In health care, this was a small net negative as a modest rebound in GSK, rallying from its Zantac-induced lows boosted by some consistent but minor drug progress in the portfolio, was offset by a broadly equal move by AstraZeneca, which is a substantial underweight position for the Fund.
 
Elsewhere, the most pronounced detractor was Crest Nicholson as a prior approach from industry peer Bellway melted away. Whilst this was a little unfortunate, the fact that Bellway saw attractions here in the first place speaks to the latent value on offer from a franchise that has consistently underearned relative to its potential and possesses one of the longest and most attractive landbanks in the sector. As documented previously, credible new management has been injected here, and we see significant potential to drive shareholder value through a more disciplined capital approach.

Mony Group (formerly Moneysupermarket) saw weakness over the month as the market fretted over a potential reduction in insurance switching volumes as premium inflation started to fade. Whilst this is entirely possible, such a theory is untested at these elevated levels of absolute cost, as the car insurance industry has been forced to reprice policies to reflect substantially higher claims inflation and cheap capital is no longer flooding in to dampen rates on the first sign of improvement. In addition, it overlooks the strong progress made on wholesale (where significant deals have been signed, including with industry leader Autotrader) and its substantial progress on Al and data, through which it's already demonstrating productivity improvement and a pleasing cadence of new product introductions. Management share purchases here suggest we are not the only ones to see value.

Rolls-Royce, meanwhile, delivered another great set of results that trounced estimates, with the cash flow particularly impressive and growth opportunities around data centres in power systems and small module nuclear reactors (SMRs) coming increasingly into view. A subsequent meeting with management was highly reassuring and lends credence to the view that despite a strong period of performance, there is plenty more to go from here. It remains a core position.

Performance data for the period 16 June 2008 to 23 October 2009 is for Ryder Court UK Dynamic Fund. From 23 October 2009 onwards, the Fund converted to the JOHCM UK Dynamic Fund.

Data shown net of fees, net income reinvested. Please note that all fund performance is shown against the FTSE All-Share TR 12pm adjusted. Performance of other share classes may vary and is available on request. Where shown, monthly returns table shows compounded discrete monthly performance. Performance of other share classes will vary and is available on request. During the period 16 June 2008 to 23 October 2009 the performance record is based on the pre-existing share class that had a higher management fee.

FTSE International Limited (“FTSE”) © FTSE 2017. The Industry Classification Benchmark (“ICB”) and all  rights in it are owned by and vest in FTSE and/or its licensors. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence. Neither FTSE, nor its licensors accept any liability for any errors or omissions in the ICB. No further distribution of ICB is permitted without FTSE’s express written consent.

Past performance is no guarantee of future performance. The value of an investment and the income from it can fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested. The annual management charge is deducted from the capital of the Fund. This will increase the income from the Fund but may constrain or erode potential for capital growth. The Funds investment include shares in small-cap companies and these tend to be traded less frequently and in lower volumes than larger companies making them potentially less liquid and more volatile.