Focusing on the Fundamentals

Equity market returns have been narrowly concentrated in recent years. But the unpredictability of market timing highlights the need for a disciplined investment approach and a diversified portfolio of global companies. In this article, Guido Bicocchi explains why focussing on the fundamentals has always been a key part of our investment philosophy.

Question: How have investment portfolios fared recently?

For the year to 31st August, the total return for the Balanced Fund is 7% and for Income Fund is 10%, both of which compare favourably to UK inflation of 4% over the same period.

However, we are mindful that recent returns have not kept pace with some of your expectations. Especially when compared to the US technology stocks, which have largely driven market performance.

Over shorter periods, financial market returns can be heavily influenced by investors’ sentiment, as the recent reaction to US unemployment figures highlighted. But in such an environment, it is critical that we don’t deviate from our disciplined investment approach.

The unpredictability of market timing underscores the need for consistent exposure to a global list of companies.

Diversification has long been recognised as an effective strategy for reducing risk while potentially boosting returns. A principle that has always been a central factor in our investment approach.