The Brunner Investment Trust PLC has released its monthly update for July 2023. The global equity markets performed well during the month, with cyclical sectors such as IT, Communication Services, and Consumer Discretionary outperforming defensive sectors. China and emerging markets also saw a boost as the Chinese authorities announced measures to stimulate growth. The Bank of England and the Federal Reserve raised interest rates by 0.25% in July, following a 0.5% rate rise in June. Inflation rates in the US and Eurozone continued to ease, while UK inflation figures came in below expectations. This led to a change in the narrative around UK inflation, reducing pressure on the Bank of England to raise interest rates aggressively. The stock market responded positively to this change in expectations, particularly medium and smaller-sized companies that are more exposed to the domestic economy.
In terms of portfolio performance, the Trust slightly underperformed its benchmark in July, with St James's Place being the largest detractor. The Net Asset Value total return for the month was 1.74%, compared to the benchmark's 2.34% return. Microsoft, which had performed strongly year-to-date, dropped slightly from an all-time high, while Partners Group and Charles Schwab were among the best contributors to performance in the financial sector. The Trust initiated a position in ASML, a market leader in photolithography equipment, during the month. The company's extreme ultraviolet (EUV) lithography technology allows semiconductor manufacturers to increase the number of transistors on the same area of silicon. The Trust financed this position by trimming its holdings in Microsoft, Yum China, Munich Re, Itochu, Estee Lauder, and Abbvie.
Overall, the Trust's portfolio managers remain optimistic about the long-term outlook, particularly in the financial sector. The Trust's website provides more detailed information on portfolio breakdown, performance, and dividend information.