London markets bounced substantially in the second quarter and are now 23.5% above the trough for 2020 marked on 23 March. Wall Street has been notably stronger than London thanks to a significantly higher exposure to technology and healthcare businesses – the UK is far behind here.

We continue to see plenty of opportunities in these volatile markets and this is reflected in another busier-than-usual month for portfolio activity. To reiterate what we have said before, we look to be proactive in uncertain markets (such as we have now), and to focus always on the long-term fundamentals of the businesses that we invest in. We initiated two new positions during June, investing in antibody manufacturer Bioventix and Greggs, the purveyor of sausage rolls, both pork and vegan. These purchases were funded from the sale of HSBC, Shell and BP. We have been materially underweight these businesses for a long time and decided that now was the moment to completely exit these positions. We no longer have any exposure to oil and gas within the Fund as we believe the sector is structurally challenged by the declining use of fossil fuels and that the dividend payments from these oil majors are not sustainable.

The share prices of consumer goods giants Unilever and Diageo have continued to lag the market recovery and remain well below previous levels. We added to our investment in both businesses in June, investments that we have held in the Fund for almost 20 years now. These are exceptional businesses and we are confident that they will come out the other side of 2020 stronger than ever. We also added to our positions in some more recent investments, namely Trainline, Judges Scientific and IntegraFin, as shares in these quality businesses come-off during the month.

One surprising advantage of the world moving to video calls during the COVID-19 pandemic is that the level of corporate access that we have experienced over the same period has greatly improved. Across the investment team at Church House, we have never been so busy speaking with company management and sector analysts. Meetings that previously might have taken weeks (or even months) to arrange now come together in a matter of days and, frankly, are often better than face-to-face conversations. To highlight just one call, we had a fascinating afternoon hearing about developments in veterinary pharmaceuticals during the pandemic. This is especially relevant for our investment in Dechra Pharmaceuticals, known best for ‘companion animal’ (i.e. dog and cat) drugs. We always believed that Dechra should prove relatively recession proof in that the last thing that people would compromise on is keeping their family animals healthy – this has been proven emphatically true during lockdown and, with the price of dogs and cats reportedly going through the roof, we think that Dechra has a busy few years ahead of them.