Published: 25th October 2021 (3 Min Read)

The portfolio rose by 5.29% over the quarter compared to the benchmark which declined by 0.39%. Despite the very welcome improvement in demand across most sectors well publicised labour shortages, rising energy and wage costs combined with serious supply chain issues are bound to put pressure on margins and we need to be very aware of this over the next two quarters. The home improvement sector is an example where a build-up of savings due to a lack of spending on normal activities has led to a surge in demand for both materials and tradespeople leading to some dramatic price rises.

In addition to this the United Nations Climate Change Conference (Cop 26) taking place in Glasgow in November is likely to result in new regulatory requirements and costs for businesses with greater transparency and disclosure required. We can see the transition occurring already in some of the companies within the portfolio where sustainable strategies are implemented within core business activities. In terms of activity, within the portfolio we have taken further profits in Cerillion, and we have reinvested into Microlise. They are a provider of transport management software helping fleet operators improve efficiency, safety and reduce emissions. They are an example of a company which could benefit from any future developments from Cop 26 as their technology enables fleet operators to comply with stricter environmental regulations. Additionally, they have been resilient during the Covid-19 pandemic which is reassuring to their business today.

It has been an encouraging year so far for the portfolio in both actual and relative returns but there are some serious short-term headwinds therefore it is only right to say that we will be pleasantly surprised if the year-end report maintains the current progress.

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Risk warning: You should remember that the value of investments, whether pooled or direct equities, and the income derived therefrom may fall as well as rise and you may not get back the amount that you invest. In the event that you require a level of income higher than that generated by your portfolio, you should be aware this will dilute the capital value of your portfolio. Past performance is not a guide to the future. If you are in any doubt of the suitability of an investment for your particular circumstances, you should contact an investment manager for tailored advice.
Article written by
Tom Hewitt