The Sceptre UK Fund was up by 2.3% in February which compares to a fall of 7.2% in the FT All Share index. Over the past 4 months the Sceptre UK Fund has outperformed the FT All Share index by over 17% and is more than 18% above its absolute low set in late November.

Whilst individual stock prices and the overall market continue to be very volatile, we have seen a substantial gap opening between the performance of a number of our stocks (particularly our largest weightings) and that of the market. We continue to believe that owning market leading companies that have low or manageable debt levels and that are run by experienced and very capable management teams will lead to continued out performance over time. The concerns for the future of the world’s banking system and the refinancing of corporate debt are very real and are affecting overall sentiment in the market. We do not know how long this will continue but are happy to be holding extremely well run companies with solid market positions that will be strong enough to survive the recession and emerge much stronger than their competitors when the economy picks up.

We have seen a substantial slowdown in global economies in the final quarter of 2008 and a substantial sell off in equity markets since the middle of 2007 which has continued into 2009 with no sign of any imminent change. Our focus continues to be directed at looking for leading companies operating in industries we can value, our watch list of potentials is expanding and we are confident that even fully invested we can continue to add value to the portfolio through increasing the quality of and moving into holdings with greater upside. There is no doubt in our minds that an economic recovery will happen and we are confident that our portfolio of companies will position us very well when this occurs – until such time we also have enough confidence in the security of capital that the majority of our net worth is invested in the fund.

As Shelby Cullom Davis, Founder of Davis Advisors said, “You make most of your money in a bear market, you just don’t realise it at the time”.

Chris Broadhurst