He began his comments with an overview of wider market conditions.
Frost remarked that of late there has been a shift back towards those equities on the market that are seen as having more ‘defensive’ characteristics.
The veteran investor commented that this shift in market sentiment is the consequence of the recent bid made for Unilever, viewed by the market as a typical defensive share. Unilever sells a range of consumer products, and so is often categorised as a ‘consumer staple.’
Frost commented, ‘It is difficult not to wonder if something is amiss in the world of consumer staples. Initiatives on costs and margins are to the fore and yet trends in sales look lacklustre at best. A cynic might say that M&A and leverage are being seen as panaceas by an industry that has perhaps leant too heavily on price over volume. Time will tell.’
The new investment he has made over the past month is Nordea, a Scandinavian bank. He said that the company, which operates in the Baltic and Scandinavian region, ‘has an attractive yield and we see the current negative interest rates as anomalous with the underlying inflation and growth rates in the region. Nordea has already generated decent returns but higher interest rates would be a significant help.’
The Artemis Income fund has returned 97 per cent over the past ten years, compared to 74 per cent for the average fund in the IA UK Equity sector in the same time period.
The fund has a yield of 3.99 per cent at the time of writing. The largest investments in the fund are BP, Relx, and Imperial Brands.