The asset class suffered another torrid month with small and mid-cap equities once more bearing the brunt of the losses, although large cap indices did suffer to a moderate extent. The concerning double act of ever more aggressive interest rate rises from the Bank of England and mounting investor concerns about an imminent recession were mostly to blame.
However, accelerant was thrown on those particular fires by the so called “mini budget” on September 23rd which sent all of UK domestic equities, government gilts, corporate bonds and Sterling into a tailspin. This has resulted in UK equities de-rating further from already cheap levels, as investors fear that the budget and plans to ameliorate the cost of living crisis will be overwhelmed by significantly higher interest rates. Whilst the next few months are likely to be choppy, most of the companies we are looking to invest in have been through many cycles and, in general, are in possession of strong balance sheets. We are therefore looking for opportunities at these unusually low valuations.