Dynamic Fund

Key points

• Investment management responsibility for the fund has been with John Husselbee of North Investment Partners since May 2008
• Sector: IMA Flexible

Current views

Global equity markets were up strongly, with ‘cyclicals’ and ‘value’ strongly outperforming ‘quality’ and ‘defensives’. Global economic data continued to beat expectations, most notably in the US. Improvement in the labour and housing markets has proven frustratingly slow during Obama’s term in office; however as we move into election year there are finally signs of life in both.

The Federal Reserve extended their dovish tone, with the majority of members seeing rates anchored at rock bottom until at least the end of 2014. A 2% inflation target was also initiated.

Many nations in the developing world continued to ease monetary policy as inflation subsides. These economies are largely following a traditional cycle, albeit living with the tail risk of a blow up in the developed world.

American earnings season got off to a strong start; again the major winners so far have been the big global brand names who have significant presence in the developing world.

A new holding in Better Capital 2012 was funded through the sale of Asia ex Japan equity, where the fund remains overweight but given recent strength we took some profits. Cash funded the remainder of the trade, as we believe the investment is likely to return significantly more than Libor on a medium term. Better Capital is a private equity company focused on buying up under-performing companies that require restructuring operationally and financially.

Investor sentiment has been successfully buoyed by global policy response. For markets to make significant progress from current levels, global economic data must continue to improve and events in Europe to remain under control. We remain hopeful but cautious on both counts.

Asset allocation