The Sceptre UK Fund was up 20.7% in July which compares to a rise of 8.4% in the FT All Share index for the month. This brings the fund to being up by 70.6% YTD compared to 6.5% for the FT All Share index. As of the 30 June Lipper Hindsight (a fund performance measurement company owned by Thomson Reuters) listed the Sceptre UK Fund in the Top 3 YTD and the Top 10 since inception of the fund (4+ years) within the UK Equity Fund universe of some 470 peers. Given the continuing strong performance in July it is likely this has improved further.

Our top 5 holdings now make up 62% of the portfolio and were up 55%, 17%, 45%, 10% and 19% in the month and this led us to sell some of our biggest holding and to add to the weightings of 5 names that have underperformed (relatively) since the start of the year. We believe that these companies currently trade below half our calculation of fair value and that their weightings within the fund should be higher. It is also prudent within a very concentrated portfolio to rebalance periodically to keep the relative stock weighting approximately in-line with the potential upside (whilst also bearing in mind more qualitative issues which affect risk and concentration of sectors).

Currently the fund is spread across several sectors as follows:

16% Travel & Leisure

19% Consumer Cyclicals

6% Insurance

12% Engineering

13% Technology

20% Construction related

3% General Financial

11% Support Services

As we have said in many of our monthly updates over the past 9+ months, we believe that the stock market continues to undervalue the financial prospects for many companies and that we have a portfolio of excellently managed businesses that are cash generative and that have cut back costs in order to best cope with the economic downturn. With businesses now seeing stability and some signs of growth we think our market leading companies will be best placed to take full advantage of the coming recovery and that this will translate into solidly improved profitability.

One further highlight of a busy month was our move to a new office, please note our new address and telephone number.

Chris Broadhurst