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Monks too light in US

MNKS : Monks too light in US

Monks has published its interim results covering the six month period to the end of October 2014. Over this time the fund generated a return on net assets of 4.9% and a return to shareholders of 5.3% – lagging the return on the FTSE World Index of 8.0% but beating the average fund in its AIC peer group. The interim dividend was maintained at 0.5p.

The statement says being overweight in the UK and underweight in the US (especially the larger members of the NASDAQ Index) relative to the FTSE World Index was a principal cause of their underperformance of that index during the period. They highlight positive contributions from  Alnylam Pharmaceuticals, which focuses on the area of RNA interference; it announced positive clinical trial results. Their largest holding, IP Group, which commercialises ideas originating in leading universities, announced a significant increase in its net asset value, helped by the listing of a number of portfolio companies. Burger King, the US-based fast food chain has a new management team that has been making operational changes to improve profitability and during the period they announced a deal to take over the Canadian chain, Tim Hortons, providing even more scope for future growth. Go-Ahead, the UK bus and train franchise group, was awarded the Thameslink rail franchise and resumed dividend growth after posting encouraging results. They also say there was also good news for UK quantum dot company, Nanoco after its commercial partner, Dow Chemical, announced that it is to build a new plant to mass-produce Nanoco’s quantum dots in South Korea for sale to manufacturers of television and computer screens. Internet-related businesses such as MercadoLibre, Naspers and Facebook also performed well during the period but two New Zealand-based companies in this area, TradeMe and Xero, performed poorly owing to concerns about their competitive positions.

Despite some positive news from the exploration company, President Energy, which announced the discovery of oil in Paraguay, this was a bad six months for oil and gas-related companies owing to a sharp fall in the oil price and the imposition of sanctions affecting drilling activity in Russia. They say Enquest, a UK exploration and production company, the oil drillers Seadrill and North Atlantic Drilling along with the oil service company Petrofac were a notable drag on performance during the period.

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