Manchester and London’s benchmark-beat fronted by tech

Shift to global helps Manchester and London outperform

The global sector company, Manchester and London (MNL), delivered a total NAV return of 3.4% over the six-month period to 31 January 2020, 4.2% ahead of its benchmark, the MSCI UK investable market index.

MNL focuses on the technology, healthcare and consumer sectors. The company released the following breakdown:

Total return of underlying sector holdings in local currency
(excluding costs and foreign exchange)
Information technology 7.3%
Consumer services 3.1%
Consumer discretionary 2.6%
Other investments (including beta hedges) (1.9%)
Foreign exchange, costs & carry (7.7%)
Total NAV per Share return 3.4%
    The manager provided the following notes on allocation:
  • “Information technology: The Information Technology sector had a positive half year, illustrated by the Nasdaq rising low double digits over the period.  Material positive contributors to the portfolio’s performance included Microsoft Corporation, Salesforce.com Inc., NVIDIA Corporation, Adobe Inc., Visa Inc. and Mastercard Inc.  There were no material negative contributors.The portfolio’s delta-adjusted exposure to the sector at period end was around 41 per cent of net assets.   
  • Communication Services: Material positive contributors from the sector for the portfolio included Alphabet Inc. and Facebook, Inc.  There were no material negative contributors. The portfolio’s delta-adjusted exposure to the sector at period end was around 26 per cent of net assets.   
  • Consumer discretionary: Key positive performers were Alibaba Group Holding Ltd and Amazon.com, Inc.   The only material negative contributor was Expedia Group Inc. which was disposed of during the period. Overall, the portfolio’s delta-adjusted exposure to the sector at period end was around 20 per cent of net assets, of which the vast majority relates to Amazon and Alibaba.
  • Other investments including beta hedges: Other investments, primarily beta hedges, represented around minus 18 percent of the portfolio’s delta-adjusted exposure of net assets.  It should be expected that these hedges perform adversely in a rising market as their role is to provide some downside protection in a falling market.   It should be noted that since opening the average local currency return on these short positions was lower than that of the portfolio’s long positions, hence these hedges have been seen as working as intended.  With the arrival of Covid-19, we have closed all the hedge positions in a profit.”

Equity exposure as at 31 January 2020:

Company Sector*  Valuation % of net assets
Amazon.com, Inc. Consumer Discretionary   28,768  15.21
Microsoft Corporation** Information Technology 28,279   14.95
Alphabet Inc.** Communication Services 26,393  13.95
Alibaba Group Holding Ltd** Consumer Discretionary 19,463  10.29
Facebook, Inc.** Communication Services 16,526   8.74
Salesforce.com, inc.** Information Technology 14,057  7.43
Tencent Holdings Ltd** Communication Services 12,200  6.45
VISA Inc. Information Technology 12,180  6.44
Adobe Inc.** Information Technology 11,786   6.23
Mastercard Inc.** Information Technology 10,892  5.76


Chairman, David Harris’s comments: “Key variables for our second half performance are likely to be the extent of economic disruption from Covid-19, the upcoming US election, the trajectory of Central Bank balance sheets, movements in the US Sovereign Yield curve and the regulation of technology companies globally.  As the manager says: “the longer-term Journey will continue through the era of software.” 

MNL: Manchester and London’s benchmark-beat fronted by tech

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