July 2010
The total return for the All Share during the month of
June was –4.6%. Again the Trust demonstrated it’s
resilience and returned –1.6%.
Although at Troy we were always sceptical about the
strength and sustainability of the recovery that had
infatuated markets up until mid April, it has been of
no pleasure to us to see opinion increasingly move
inline with our more negative perspective. Markets
had been driven by improving economic data (the
product of one off inventory rebuilding and artificial
stimulus packages) and by Quantitative Easing. With
the removal of these crutches the data has worsened
and the support for risk assets has collapsed. A
further challenge to economic growth has come from
fiscal austerity packages. Implemented across much
of Europe in response to increasing fears that bond
markets will penalise profligate governments, this
tightening represents a further reduction in demand.
It seems likely to us that in these circumstances the
Keynesian thinking at the Federal Reserve and the
Bank of England will precipitate a renewed wave of
Quantitative Easing measures aimed at reviving the
faltering recovery. With this action the risk of future
inflation will increases further and so we continue to
invest the Trust in equities with strong franchises and
pricing power.
Over the month the Trust made no new investments
and bought back 216,000 of its own shares to be held
in treasury.