Bankers Investment Trust PLC Fund Data

Global equities fell in September. Markets faced a challenging backdrop as rising oil prices, elevated bond yields (falling prices) and renewed concerns about higher inflation weighed on investor sentiment. However, continued interest in artificial intelligence (AI) provided some support to share prices. Escalating tensions in the Middle East reignited concerns about oil supplies and the impact of higher energy prices on global economic growth and inflation. Consequently, markets priced in the possibility of tighter monetary policy even after major central banks raised interest rates during the month. US equities were aided by their large technology exposure and a resilient economy. However, the Federal Reserve (Fed) raised interest rates by 25 basis points (bps) in September, and strong US labour market and Purchasing Managers' Index (PMI) data, which is taken as a measure of business confidence, increased expectations of another rate hike before the end of the year. Both the European Central Bank (ECB) and the Bank of Japan (BoJ) also raised interest rates by 25 bps. The Bank of England (BoE) left interest rates unchanged but cautioned that inflationary pressures could necessitate a rate hike in the coming months. By sector, information technology (IT) generated the strongest return, followed by telecommunications, as both were aided by gains in AI-related stocks. The basic materials sector was the weakest performer as prices of some metals, particularly gold, fell amid the surge in global bond yields and the strengthening of the US dollar. The more rate-sensitive real estate sector also underperformed, while shares across the consumer sector fell as more cyclical stocks (those typically dependent on good economic growth to do well) struggled. By region, emerging market stocks outperformed, boosted by the technology-focused markets of Taiwan and South Korea. Japanese equities also outperformed the global index. Despite higher interest rates, the government's pro-growth reform agenda and strong earnings momentum continued to support sentiment. Europe ex UK equities underperformed and, although recent economic growth data has been encouraging, the region's vulnerability to higher energy prices dampened investor sentiment. Holdings in the technology sector contributed to relative performance, with both the overweight allocation and security selection adding value. The biggest contributors at the stock level were Taiwan Semiconductor Manufacturing Company and Applied Materials, as the shares of both companies rallied amid ongoing optimism that AI semiconductor demand could remain robust, prompting several positive analyst reports during the month. Stock selection in the financial sector also made a positive impact, led by the Japan Post Bank holding. The Japanese bank is seen as a potential beneficiary of the elevated interest-rate environment, as higher margins on lending could boost its profitability. However, Morgan Stanley underperformed and detracted from performance, as bond market volatility and wider geopolitical uncertainty were viewed as potential headwinds to the investment bank. Elsewhere, industrials holdings detracted, most notably the holding in Contemporary Amperex Technology (CATL). CATL is the world's largest electric vehicle (EV) battery manufacturer, but its shares sold off in September due to a weaker outlook for EV demand, as well as reports that some automakers were looking to broaden their supply chains. Given the dynamic nature of events in the Middle East, we believe volatility could remain elevated. As active investment managers with a broad opportunity set across global equities, we seek to navigate any weakness by taking advantage of what we see as attractive investment opportunities. We believe our investment focus on companies with strong profits and cash flows, as part of a diversified portfolio, can help provide some resilience to an investment portfolio during more volatile times. We also think that our internal expertise across equity regions and sectors, as well as our fundamental research process, gives us a good understanding of the risks and opportunities that global events can present. It is worth taking a step back when headlines can seem daunting. We think current events reinforce some of our long-held themes, such as the need for greater electrification and deglobalisation. At the same time, some trends may remain inexorable, such as providing for ageing populations or the rise of AI. By investing for the long term, while seeking to understand (but not necessarily react to) short-term noise, we aim to achieve long-term capital growth for our investors, and we also aim to grow the dividend over time. This provides investment discipline not just for the companies we invest in, but also for us as stewards of your capital.

Global equities fell in September. Markets faced a challenging backdrop as rising oil prices, elevated bond yields (falling prices) and renewed concerns about higher inflation weighed on investor sentiment. However, continued interest in artificial intelligence (AI) provided some support to share prices. Escalating tensions in the Middle East reignited concerns about oil supplies and the impact of higher energy prices on global economic growth and inflation. Consequently, markets priced in the possibility of tighter monetary policy even after major central banks raised interest rates during the month. US equities were aided by their large technology exposure and a resilient economy. However, the Federal Reserve (Fed) raised interest rates by 25 basis points (bps) in September, and strong US labour market and Purchasing Managers' Index (PMI) data, which is taken as a measure of business confidence, increased expectations of another rate hike before the end of the year. Both the European Central Bank (ECB) and the Bank of Japan (BoJ) also raised interest rates by 25 bps. The Bank of England (BoE) left interest rates unchanged but cautioned that inflationary pressures could necessitate a rate hike in the coming months. By sector, information technology (IT) generated the strongest return, followed by telecommunications, as both were aided by gains in AI-related stocks. The basic materials sector was the weakest performer as prices of some metals, particularly gold, fell amid the surge in global bond yields and the strengthening of the US dollar. The more rate-sensitive real estate sector also underperformed, while shares across the consumer sector fell as more cyclical stocks (those typically dependent on good economic growth to do well) struggled. By region, emerging market stocks outperformed, boosted by the technology-focused markets of Taiwan and South Korea. Japanese equities also outperformed the global index. Despite higher interest rates, the government's pro-growth reform agenda and strong earnings momentum continued to support sentiment. Europe ex UK equities underperformed and, although recent economic growth data has been encouraging, the region's vulnerability to higher energy prices dampened investor sentiment. Holdings in the technology sector contributed to relative performance, with both the overweight allocation and security selection adding value. The biggest contributors at the stock level were Taiwan Semiconductor Manufacturing Company and Applied Materials, as the shares of both companies rallied amid ongoing optimism that AI semiconductor demand could remain robust, prompting several positive analyst reports during the month. Stock selection in the financial sector also made a positive impact, led by the Japan Post Bank holding. The Japanese bank is seen as a potential beneficiary of the elevated interest-rate environment, as higher margins on lending could boost its profitability. However, Morgan Stanley underperformed and detracted from performance, as bond market volatility and wider geopolitical uncertainty were viewed as potential headwinds to the investment bank. Elsewhere, industrials holdings detracted, most notably the holding in Contemporary Amperex Technology (CATL). CATL is the world's largest electric vehicle (EV) battery manufacturer, but its shares sold off in September due to a weaker outlook for EV demand, as well as reports that some automakers were looking to broaden their supply chains. Given the dynamic nature of events in the Middle East, we believe volatility could remain elevated. As active investment managers with a broad opportunity set across global equities, we seek to navigate any weakness by taking advantage of what we see as attractive investment opportunities. We believe our investment focus on companies with strong profits and cash flows, as part of a diversified portfolio, can help provide some resilience to an investment portfolio during more volatile times. We also think that our internal expertise across equity regions and sectors, as well as our fundamental research process, gives us a good understanding of the risks and opportunities that global events can present. It is worth taking a step back when headlines can seem daunting. We think current events reinforce some of our long-held themes, such as the need for greater electrification and deglobalisation. At the same time, some trends may remain inexorable, such as providing for ageing populations or the rise of AI. By investing for the long term, while seeking to understand (but not necessarily react to) short-term noise, we aim to achieve long-term capital growth for our investors, and we also aim to grow the dividend over time. This provides investment discipline not just for the companies we invest in, but also for us as stewards of your capital.