The see-saw nature of markets continued in July reversing June’s weakness with stock markets rising albeit on low summer holiday induced volumes. The Fund, being defensively positioned, gave back its June out-performance. As intimated in last month’s review, we are more comforted that the levels of markets are more or less in line with underlying economics and any move – either up or down - from current levels should be less extreme. We suspect a reduction in volatility would be very welcome.
While both equity and bond markets have seen much less activity over the month, this cannot be said for currencies. As we noted last month, attention appears to have turned away from Europe and are now firmly focused on the US. In particular, the US Dollar has suffered a sell off in the month due in part to the perception that US interest rates will remain low for the foreseeable future but also that sustained growth is likely to be moderate at best. The twin problems of unemployment and property are not going away and create material headwinds for any recovery.
Within the trust sector, shareholders continue to exercise successfully for change within the higher discounted funds. Interestingly, boards and directors have become much more shareholder orientated than previously which is helpful. A substantial portion of the portfolio is invested in these opportunities.
Source: Lipper hindsight to 31.07.10
SVM Global Fund’s portfolio is structured into six broad themes. Specialist investments include those exposed to specific industries or areas such as Eastern Europe or emerging markets. Property exposure is concentrated in emerging Europe and the less mature areas of developed Europe. Hedge funds represent exposure less dependent on stockmarket direction. Funds with investments in resources cover a broad range of commodities both in exploration and production. Private equity exposure is targeted towards those funds in the realisation phase of the private equity cycle.