The Fund closed the quarter -6.4%, with almost all the losses coming from the month of March. For reference, the FTSE 100 ended the quarter +5% and the more domestically focused FTSE 250 -5.6%. 

The disparity between the indices was so stark on the outperformance of the big banks and oil giant, Shell, which make up a significant proportion of the market.  The Church House UK Equity Growth portfolio focuses on quality companies which are structural winners, with strong compounding returns. We like businesses that have strong fundamentals and are price makers (rather than price takers), so when sectors like Oil & Gas and Banks outperform, we feel the negative effects in relative performance. However, since the quarter end there has been a substantial reversal in this move, and we have been active in cutting names from the portfolio and initiating in new ones we have long followed. 

Running up into this period of volatility the fund made a start in exiting its position in two consumer discretionary names: JD Sports Fashion and Greggs. Greggs had been hit hard on the back of the Autumn Statement where the increase in National Insurance and minimum wage were going to have adverse effects on the company’s balance sheet and ability to maintain margins (an estimated extra £100m a year according to Numis). To mitigate the effects, the company announced a 5p rise in the price of their sausage rolls (now £1.40), but issued a pessimistic outlook for 2025. We also started exiting JD Sports after a gloomy statement in January where the company warned of a tough future on the back of heavy discounting from their rivals and the fear of Trump’s tariffs and the effects this will have on their listings from Adidas, Nike, etc. 

In the consumer staples sector, Unilever announced the shock departure of its CEO, Hein Schumacher, with immediate effect. The outgoing German will be replaced by Unilever ‘lifer’ and CFO, Fernando Fernandez. From the outside, it looks like Schumacher had been brought in to do the dirty work (mass redundancies, selling off the ice cream divisions) but in his short tenure he has successfully turned the business around. The company announced mixed results on the back of shaky consumer confidence, but the new CEO takes on a more streamlined business and kickstarted his tenure with the acquisition of UK start-up success story, Wild Cosmetics, for over £200m. 

The fund’s top performers over the quarter were our largest holding, RELX, who continue to harness the strength of their intellectual property (legal and scientific) with the monetary benefits that AI will the bring the company. In the financial sector, Berkshire Hathaway, who entered the year with over $330bn in cash (almost 30%) started boosting its investments in big Japanese conglomerates (Mitsubishi, Sumitomo, Mitsui etc). London listed insurer, Beazley, rocketed up to an all time high in March after increasing profits by over 10% to £1.2bn. The company is benefitting from its diversified lines of underwriting but is now leading the way in cyber risk which makes up close to 20% of the business. 

Despite the difficulty of this quarter for the fund, we remain satisfied with the underlying strength of the companies in the portfolio and we will use any opportunities to add to them, or initiate in businesses we know, in any market volatility.  
 

The above article has been prepared for investment professionals. Any other readers should note this content does not constitute advice or a solicitation to buy, sell, or hold any investment. We strongly recommend speaking to an investment adviser before taking any action based on the information contained in this article.

Please also note the value of investments and the income you get from them may fall as well as rise, and there is no certainty that you will get back the amount of your original investment. You should also be aware that past performance may not be a reliable guide to future performance.