New Star Corporation (NSI) announced its annual results for the year ending June 30, 2022, during which it presented NAV full back 9.53%, leaving the net asset value of the common stock at 174.56 pence. In comparison, the investment association’s mixed investment 40-85% shares index It fell 7.12%. The MSCI AC World Total Index was down 3.73% in GBP while the MSCI UK Total Return Index rose by 3.16%. Throughout the year, the UK government bonds It fell 14.27%. In bear markets, the INE benefited from higher cash allocations to the pound sterling and the US dollar. However, trust investments in technology stocks and a relatively low allocation to both US and UK big stocks are hurting performance.
investment manager‘s review #
Global stocks and bonds fell 3.73% and 3.60% in sterling respectively during the year to June 30, 2022 as rising inflation and interest rates hurt economic growth. Global stocks rose 7.86% in sterling in the first half of the year under review with economies emerging from Covid-19 lockdowns and rising inflation largely seen as temporary. Central banks, including the Federal Reserve, became more hawkish at the start of the new year, with inflation taking hold. Global stocks and bonds fell 10.74% and 3.99% in sterling respectively during the second half of the year under review.
The Russian invasion of Ukraine in February 2022 exacerbated the surge in energy and materials prices caused by the simultaneous recovery in global demand after the end of the Covid-19 lockdowns. The United States is nearing energy self-sufficiency as it tapped into its shale gas reserves while European governments shut down coal and nuclear power plants, making the region dependent on Russian gas. In the short term, liquid natural gas can be purchased from the United States, but it will take time to reduce dependence on Russia by accelerating the transition to renewable energy and classifying some gas and nuclear developments as “green investments.”
“In July 2022, headline inflation rates in the US, Eurozone, and UK were 8.5%, 8.9% and 10.1%, well above central banks’ 2% targets. US inflation has fallen from its June high of 9.1% It may have reached its cyclical peak but inflation is likely to rise in Europe due to rising energy costs as a result of restrictions on Russian gas supplies.Before the recent announcement of energy subsidies, the Bank of England said that inflation in the UK could exceed 13% in the last quarter of 2022 due to the planned increase in energy prices from Ofgem and other factors.Monetary policy was tightened and in September 2022, the official interest rates for the United States and the United Kingdom were 3.00-3.25% and 2.25%, respectively.In the eurozone, key interest rates rose by half A percentage point in July as the European Central Bank ditched negative interest rates and by another 0.75 points in September.UK government bonds, sterling corporate bonds, and high-yield sterling bonds fell 14.27% and 14.54% and 11.78% respectively over the year as the widening spread between US and UK short-term interest rates weakened the pound and worsened the UK’s economic outlook. The pound is down 12.09% against the dollar over the year.”
Investment Manager Review – Comments on a file
“Your company generated a negative total return of 9.53% for the year under review. By comparison, the investment association’s mixed investment 40-85% equity segment, a Peer group Of the funds with a multi-asset approach to investing, typical investment in global stocks in the range of 40-85%, it fell by 7.12%. The MSCI AC World Total Index is down 3.73% in sterling over the year while the MSCI UK All Cap Total Return Index is up 3.16%. In bear markets, your company has benefited from a high allocation of cash and dollars. However, investment in technology stocks and a relatively low allocation to US and UK big stocks, hurt performance.
“In January 2022, after a shift towards tighter monetary policies by some central banks, your company increased liquidity by approximately £8 million through partial sales of the Jeweler of Money, European Special Conditions, Trojan Income and the outright disposal of Aberdeen European Income Standard and Chelsea Income monthly orbit.
“Your company also received a net £14.8 million from the sale of a private equity investment, Embark Group, to Lloyds Banking Group. As a result of this disposition, the company’s private equity investment decreased from 12% of assets to 2% over the year. Nearly From £1 million in Vietnam Enterprise Investments In March, after US stocks plunged in January and February, $5 million was invested in the iShares Core S&P 500 exchange-traded fund (ETF).
Monetary policy tightening contributed to the market’s leading turnover in favor of global value stocks, which rose 5.25% in sterling over the year, while growth stocks fell 12.77%. Growth stocks made gains during the early stages of the Covid-19 pandemic because their future cash flows were discounted less aggressively in a near-zero interest rate environment. Technology stocks have been particularly strong because the Covid lockdowns have accelerated the adoption of new technologies, driving up demand for electronic goods and online services. However, US technology stocks fell 7.45% in sterling over the year, and Polar Capital Technology fared worse, falling 21.75% because its holdings in smaller stocks tended to underperform its larger peers.
The underperformance of developing stocks and technology companies in particular also contributed to the 11.13% drop for Fundsmith Equity, whose focused portfolio included Meta, the owner of Facebook, as well as Intuit and Paypal. By contrast, Baillie Gifford’s global income growth fell 2.75%. diversification And the income delegation proved defensive.
“European stocks have slowed excluding the UK, falling 9.78% in sterling as energy prices, especially gas prices, have risen after the Russian invasion of Ukraine. European policymakers are being forced to face the consequences of energy policies that have made the region dependent on Russian gas. Income has plummeted. BlackRock Continental’s European income fell by 10.56%, while European income for Crux European Special Situations, which has a tendency to grow and typically has large holdings in smaller companies, fell by 15.27%.
UK stocks rose against the trend due to the UK stock market’s bias towards cyclical value sectors such as energy and mining. However, UK small businesses underperformed due to their high sensitivity to local trends, falling 17.18%. Within your company’s portfolio, Man GLG Income was the best performer, up 0.83%. By contrast, Trojan income, which typically invests in companies where earnings sensitivity is lower than the market, fell 6.94%. Chelverton UK Equity Income and Aberforth Split Level Income, two small niche companies, were down 11.51% and 23.19%, respectively. Weakness among UK small businesses was amplified by lower Aberforth Split Level Income income due to trust-generated portfolio leverage. zero Dividend preferred stock.
Shares in emerging markets and Asia excluding Japan fell 14.68% and 14.44% respectively in sterling over the year, with Chinese stocks, the largest of both indices, down 22.30%. Chinese stocks slumped on weak growth stemming from the country’s “zero COVID” policy, which has shut down cities such as Shanghai, an indebted real estate sector and increased political risks from state intervention in the country. quoted Businesses according to Beijing’s “common prosperity” policy. Matthews’ Asia earnings excluding Japan and Liontrust Asia’s income fell 9.93% and 8.65%, respectively. Investments by JP Morgan, Emerging Markets Income Trust and Emerging Markets Income Fund were down 13.86% and 5.48%, respectively. The bias towards regional funds managed with income mandate proved defensive as large low-yielding Chinese tech companies such as Tencent and Alibaba fell sharply while higher-yielding stocks such as Taiwan Semiconductor Manufacturing Company fell less.
Among emerging market income investments in a single country, Stewart Investors India Sustainability, which aims to buy companies with strong business models and balance sheets, was the best performer, up 9.31% while Indian shares were up 8.70% in sterling. Investments by Vietnamese companies are down 3.16% Vietnamese stocks benefit from monetary discipline, high public sector spending and an expanding middle class Some global manufacturers have moved production capacity from China to take advantage of lower costs and avoid Sino-US sanctions After the Russian invasion of Ukraine, HSBC Russia fund suspended Capped Stock Traded Trading Your company has taken a conservative approach and valued the investment at zero.
“Your company invests mostly in equity funds and achieves diversification by holding other assets including cash, currencies, low-risk multi-asset funds, alternative funds and gold equity funds. It has minimal exposure to bonds and no direct investment in UK government bonds which have fallen sharply since The end of the year for your company, forcing the Bank of England to step in and buy British government bonds to stabilize the market.Your company benefited from owning dollars, which represented 12.5% of NAV in year end, with sterling down 12.09% against the dollar over the year. Among its lower-risk multi-asset holdings, Trojan is up 1.47% while EF Brompton Global Conservative is down 6.54%. And Aquilus Inflection, an alternative investment, was down 3.11%. Gold rose 15.25% in sterling but gold stocks fell 9.87% as margins came under pressure from rising costs. BlackRock Gold & General, which invests in gold producers, fell 10.36%.”
Investment Manager Review – Comments on Forecast
In the early fall of 2022, US inflation remained well above the Federal Reserve’s 2% target, but appeared to be close to cyclical highs, with tightening monetary policies reducing demand and economic activity. In Europe, inflation may rise further due to restrictions on Russian gas supplies. The US economy has been technically in recession after two quarters of economic downturn, and some leading indicators are pointing to the possibility of further contraction. US 10-year government bond yields close to 3% may provide a buying opportunity.
Stock valuations have fallen, but earnings expectations could be too high as margins come under pressure from rising costs and the impact of higher costs of living on consumer spending. The long-term outlook for stocks looks generally positive, because some companies have the ability to pass on higher inflation through higher prices and reward investors with higher dividends. Equity investments may outperform income because higher returns may support valuations. Your company’s equity income holdings also contribute to the ability to pay dividends even though investment income has not recovered to pre-Covid-19 levels.
“At the end of the year, your company held 19.79% of net assets in sterling and cash dollars. Your company was positioned cautiously ahead of the Russian invasion of Ukraine and took advantage of weak markets to modestly increase its overall equity allocation. Further declines in equity markets may provide buying opportunities. for long-term investors.
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Originally published at San Jose News Bulletin
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