Equity markets ended 2017 on a positive note as sentiment shifted to resource stocks favouring the large caps segment over mid and small caps where the Fund invests. Notwithstanding this the Fund marginally outperformed its IA UK All Companies benchmark in December. Not for the first time in 2017 the main contributor to the Fund’s performance in the month was Games Workshop, which issued yet another positive trading update. Immupharma was the Fund’s biggest percentage riser, as the Phase 3 trial for its lead Lupozor drug completed without any adverse event, with trial results due to be published in the first quarter of 2018. Our worst performer was Maintel, the business telecom service provider, which warned for the second time this year as a result of delayed contracts and issues at a recent acquisition. There were no material changes to the portfolio over the month, with dealing activity restricted to topping up a broad range of existing holdings.
Moving into 2018 the outlook for global growth looks reasonably robust, with a further boost coming from the recent US corporation tax reductions. Whilst UK domestic growth is forecast to be slow by international standards it’s still expected to be “reasonable” by historic standards. Relatively full domestic employment, which has surprised many observers, has been a notable feature post BREXIT. Upward pressure on pay rates and the recent strengthening of Sterling means the low valuations on unloved domestic cyclicals are becoming increasingly compelling as spending power recovers and we have started to tentatively address our underweight exposure to this part of the market.