November Report

• Global share markets roared back in November as inflation pressures eased, raising hopes that interest rates in most major economies would not rise further.
• Falling interest rate expectations boosted growth stocks, with information technology and industrial company shares performing particularly strongly.
• The Portfolio returned 5.2% in November, outperforming the benchmark which returned 4.4%.

Top Holdings (alphabetically)

Alphabet Inc

United States

Communication Services

Alphabet Inc. operates as a holding company. The Company, through its subsidiaries, provides web-based search, advertisements, maps, software applications, mobile operating systems, consumer content, enterprise solutions, commerce, and hardware products.

Amazon.com Inc

United States

Consumer Discretionary

Amazon.com, Inc. is an online retailer that offers a wide range of products. The Company products include books, music, computers, electronics and numerous other products. Amazon offers personalized shopping services, Web-based credit card payment, and direct shipping to customers. Amazon also operates a cloud platform offering services globally.

AMETEK Inc

United States

Industrials

AMETEK, Inc. is a global manufacturer of electronic instruments and electromechanical devices. The Company manufactures advanced instruments for process, aerospace, power, and industrial markets and is a supplier of electrical interconnects, specialty metals, technical motors and systems, and floor care and specialty motors.

Deere & Co

United States

Industrials

Deere & Company manufactures and distributes a range of agricultural, construction, forestry, and commercial and consumer equipment. The Company supplies replacement parts for its own products and for those of other manufacturers. Deere also provides product and parts financing services. Deere and Company extends its services and products worldwide.

Meta Platforms Inc

United States

Communication Services

Meta Platforms, Inc. operates as a social technology company. The Company builds applications and technologies that help people connect, find communities, and grow businesses. Meta Platform is also involved in advertisements, augmented, and virtual reality.

Microsoft Corp

United States

Information Technology

Microsoft Corporation develops, manufactures, licenses, sells, and supports software products. The Company offers operating system software, server application software, business and consumer applications software, software development tools, and Internet and intranet software. Microsoft also develops video game consoles and digital music entertainment devices.

Schneider Electric SE

France

Industrials

Schneider Electric SE manufactures electrical power products. The Company offers car chargers, home security goods, light switches, access control, sensors, valves, circuit breakers, cables, accessories, signaling devices, fuse, motor starters, and voltage transformers. Schneider Electric serves customers worldwide.

Thermo Fisher Scientific Inc

United States

Health Care

Thermo Fisher Scientific, Inc. manufactures scientific instruments, consumables, and chemicals. The Company offers analytical instruments, laboratory equipment, software, services, consumables, reagents, chemicals, and supplies to pharmaceutical and biotech companies, hospitals and clinical diagnostic labs, universities, research institutions, and government agencies.

UnitedHealth Group Inc

United States

Health Care

UnitedHealth Group Incorporated owns and manages organized health systems. The Company provides employers products and resources to plan and administer employee benefit programs. UnitedHealth serves customers in the United States.

Vertex Pharmaceuticals Inc

United States

Health Care

Vertex Pharmaceuticals Incorporated discovers, develops, and commercializes pharmaceutical products. The Company develops drugs for the treatment of cystic fibrosis, cancer, inflammatory bowel, autoimmune disease, and neurological disorders. Vertex Pharmaceuticals serves healthcare sector worldwide.

Market Review

Global share markets rebounded strongly as inflation data eased across major developed economies. This enabled central banks to pause hiking interest rates and investors switched their attention towards lower rates next year. Market sentiment improved further as US-China relations appeared less frosty after Presidents Joe Biden and Xi Jinping met.

All global equity market regions and sectors (except energy) strengthened during November. The month saw a rotation of portfolios into growth stocks as interest rate expectations fell and energy prices dropped further. This particularly boosted the information technology sector, while strength in industrials may be a sign of improving consumer and business sentiment.

Falling oil prices as the US increased output, OPEC+ failed to agree meaningful production cuts and concerns grew about demand from China, weighed on the energy sector. In November stocks fared well across all major markets except China, which again lagged despite an improvement in retail sales and industrial production data.

Portfolio Comment

The Portfolio outperformed the benchmark during November, driven by its strong relative stock performance, especially in health care, communications services, and Europe more generally. The Portfolio’s overweight position in health care (which underperformed the broader market at an index level) and weak stock performance in consumer discretionary were the main detractors from relative returns.

Shares of Netherlands-based payment processing firm Adyen recovered from a sell-off in the previous quarter. This followed the company reiterating its long-term strategy and competitive advantage at its 8 November investor day. The company projected that it would deliver annual revenue growth in the low-to-high 20% range through 2026. This validated the Portfolio’s assessment that Adyen’s technological edge and superior digital payments platform will drive increasing market share in a fast-growing industry. Furthermore, it forecast that from next year it will gradually expand EBITDA margins, which are anticipated to exceed 50% by 2026.

Strong third-quarter earnings results were published by US-based international streaming and production company Netflix and US-based image-sharing and social media platform Pinterest. Both stocks outperformed, driving strong stock performance in the Portfolio’s communication services holdings.

The Portfolio’s stock performance was strongest in Europe, with outperformance particularly strong inside the eurozone. In addition to Adyen, France-based digital automation and energy management group Schneider Electric, and Germany-based multinational software company SAP outperformed upon reporting strong third-quarter earnings results.

Stock performance in the US detracted from relative returns in November. Biopharmaceutical group Vertex Pharmaceutical which focuses on cystic fibrosis treatments underperformed following strong share price gains this year.

As we move into the final month of the calendar year we will look to deliver a ‘year in review’ in early 2024. Please let us know any questions you would like us to cover, either specific to the sector, Portfolio, or any portfolio holdings below.