Adding to Microsoft, Humana
We added to our holding in Microsoft from the proceeds raised by our trimming of Amdocs as its share price continues to recover (and concerns remain over slow progress around ESG related matters). Elsewhere, we added to US healthcare firm Humana to take advantage of weakness in its share price. Conversely, we moved to lock-in gains in Mettler-Toledo after strong performance and following a price target review that suggested less scope for further immediate near-term gains.
Broader positioning remains unchanged, with an ongoing bias towards higher quality, sustainable growth companies that can prosper in any near-term economic and policy-driven volatility. We continue to add to positions where we see strong underlying quality and where the market allows us to top up holdings at more attractive levels. And where appropriate, we have been building positions that offer more defensive revenue streams given the slowdown in economic growth expectations and trimming holdings that have performed strongly and offer reduced upside potential.
Sector-wise, Information Technology, Industrials and Healthcare are our main overweights, whilst Financials is a modest overweight. The portfolio is underweight Communication Services, Energy and Consumer Staples. At the regional level, Emerging Markets, Japan and the UK are our biggest overweights, with the U.S. our largest underweight.
Trade tensions ease
June saw markets reverse May’s losses as investors interpreted a combination of weaker economic data and the accompanying change in Federal Reserve commentary around monetary policy as supportive of higher equity valuations. US-led trade uncertainty took a back seat, with the apparent Mexican resolution being taken well whilst the ongoing China tensions appear to have eased a little. Overall, with markets back within a whisker of all-time highs, valuations have now returned to levels that appear to be quite full given the current conditions. As we enter the interim results season, we will be looking for confirmation of a second half improvement in company outlooks, thus we continue to remain vigilant but stay constructive overall.