The Equitile Resilience Fund (UK-domiciled) aims to deliver capital growth by investing in large, growing companies in the developed markets. It is managed according to our core investment principles and uses the Equitile Fair Fee Model.
The Equitile Global Equity Fund (Ireland-domiciled ICAV) follows the same strategy and principles as the Equitile Resilience Fund. The lastest update can be found here.
May was a volatile month for stock markets, with US technology stocks falling on-average around 7% in the first half of the month before recovering most of those losses in the second half. Your portfolio faired similarly. This volatility is, we believe, driven by growing concerns over the re-emergence of inflationary pressures around the world or, more specifically, over the anticipated response of central banks to those inflationary pressures.
At least some of the recently reported inflationary pressures are to do with base effects; one year ago, we were in the most intense stage of economic lockdowns while now we are beginning to emerge out of them. This has inevitably distorted upward the reported annual inflation figures. That said, both the government debt accumulated during the lockdowns and the fiscal stimulus packages being announced to help the recovery from lockdowns has lead us to conclude inflation is the ‘new normal’. In fact, we would go as far as saying lockdowns have made the generation of inflation a policy imperative. For this reason, we expect central banks will pay only lip service to fighting inflation over the coming years. During the month we have again increased your investments in the luxury goods and mining sectors, both of which are currently benefiting from higher inflation.
It is reassuring to note that, despite a positive market return, on a like-for-like basis, the price/earnings ratio of your portfolio has fallen by over 20% since the start of the year. This improvement in valuation has come about both from strong underlying earnings growth of your technology investments and the more recent increase in your holdings of mining companies trading on modest valuations.