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525,600 (five hundred twenty-five thousand six hundred) minutes
I’ll start with a ‘thank you’ to those readers that offered some positive feedback on the April publication. Newsletters are rarely an easy write, but bearing in mind the April newsletter was written as at 5th April, when Donald Trump’s so called ‘Liberation Day’ which sent markets into a downward spiral was on 2nd April, it was as challenging a newsletter as I can remember penning.
To briefly revisit that period, the initial yet sharp decline in equity markets was followed by a subsequent softening of stance from President Trump, leading to a strong recovery:
We can observe that stockmarket volatility was extraordinary over this short period. During Covid-19 and the Great Financial Crisis (2008/9) the extent of market declines were greater, but the recoveries were much slower in their development.
The recent Liberation Day induced volatility is a function of a combination of factors.
Why there was such a significant fall:
1. Though tariffs were expected, the market took fright at the astronomical size of the initial percentage proposals which were to be imposed on certain countries.
2. Newsflow; it is my opinion that the access investors now have to immediate news can lead to irrational short-term decisions made under extreme panic, before a true assessment of value is established.
3. The ‘news’ can change quickly, particularly with President Trump at the tiller i.e. today’s ‘bad news’ can soon become tomorrow’s ‘good news’ and vice versa (see his relationship with Elon Musk as a further example). We are witnessing similar problems in the UK currently, albeit at a slower pace with the Government’s U-turns on welfare, winter fuel and taxation. Peak prior to Liberation Day Peak 8th April trough % Decline 1st July
4. Markets hate uncertainty and there was a huge amount of the unknown, not least with the complexities of cross border manufacturing and distribution.
5. Ahead of the markets getting a whiff of President Trump’s tariff proposals, equity valuations were relatively stretched despite war in Ukraine and the Middle East, global inflation trending upwards, higher taxes coming into force (in the UK from early April) and interest rates remaining stubbornly high (relative to immediate history). As such, a small shift in company fortunes was likely to lead to an exaggerated movement in share prices, hence our de-risking exercise in the winter of 2024 which I wrote about in the January newsletter.
6. The impact of ‘risk on’ indices and benchmarks, where passive investment strategies (such as tracker investments) do not invest on the basis of any valuation consideration, but purely on a market weightings basis. Therefore, by default, an inflow of investment simply means the big (by market capitalisation) get bigger, the flip side being that when a rotation comes and funds are withdrawn from equity investment, due to a loss of confidence, the biggest companies are sold off the most, indiscriminately, magnifying the negative effect.
Why was there such a significant subsequent rally?
President Trump, under pressure from rising US Treasury yields (effectively the price at which the US government borrows money), compromised on his tariff proposals. As an example, the headline US/ China tariff, having ramped up to 145%, now stands at an effective rate of 30%. In essence, President Trump came in with a sledgehammer but left with a mallet (those of you who have banged in a tent peg will know the damage this can still do when catching the thumb). Whatever one thinks of President Trump, his strategy seems to have worked. The US will now benefit by 30% from Chinese imports, and these additional monies will either fill the Federal purse or reduce sales in which case, theoretically, domestic US businesses will fill the void, thereby generating jobs and providing a catalyst for growth. He went in hard, made massive concessions, yet still ended up in front, seemingly with confidence in the markets restored. This strategy was verging on delusional but on the face of it has turned out to be ‘maverick’. The ride for investors was fairly terrifying though.
I use the word ‘seemingly’ as the one thing which may, in time, play against the strategy is a loss of confidence in the US financial system as a ‘safe haven’ for the rest of the world. Foreign countries hold around $8.8 trillion in US government debt, with major foreign investors including Japan, China and the UK. The US Dollar has long been perceived a safe haven, global currency. However, this whole episode has shown that one man can de-stabilise the global economy with a white board and a series of percentages, even if mythical in hindsight, which is incredibly concerning. President Trump’s crusade did not go unnoticed, where the well-regarded Moody’s (ratings agency) downgraded the US Government credit rating from AAA to Aa1.
In essence, President Trump came in with a sledgehammer but left with a mallet
Surely there must be a hybrid solution in the decision-making process between the US (an individual, metaphorically, firing from the hip, instantaneously) and the UK (where we become too embroiled in parliamentary process and the legalities, even if a change in direction makes good sense)? This is totally irrespective of party or political persuasion, I know the recent welfare bill is now awaiting consultation in the Autumn of 2026 but look at the Brexit situation under the Conservative government too, where it took years to achieve very little. President Trump would have just built another wall!
If you want to read more about the tariff war, Rob Finch Noyes and Hudson de Lucchi have written extensively on this, and an article can be found on the Insights area of our website.
Armaments
With unrest in the Middle East continuing to escalate, the Ukraine/ Russian war sadly not abating and the relationship between China and Taiwan remaining stretched, regrettably the armaments sector is increasingly relevant.
Firstly, we continue to deem the sector ‘armaments’ rather than ‘defence’. One of the considerable challenges of investing within this sector is to ensure that we do our best to invest in the right stock with the right motives, yet the world of arms dealing is opaque at best. As an example, BAE Systems has sold significant arms and services to the Saudi military in recent years, and they manufacture weaponry across the globe, as far afield as Japan. Whilst I am in no way insinuating that the UK/NATO or our allies are likely to go to war with these countries, the element of control or, more aptly, loss of control is a worry.
Furthermore, irrespective of sector, we are wary of businesses which are reliant on Government contracts which, though typically very large, are also persistently ‘at risk’ as Government finances can change. Governments do change and of course competition for public contracts can be intense, driving down margins or putting company fortunes at risk to procurement cycles.
Furthermore, each business tends to be quite ‘niche’ and the question arises as to which ‘armaments’ do we need exposure to. Is it heavy machinery (ships, tanks, aircraft), navigational solutions, drones, soldiers’ equipment or indeed cybersecurity? As such, despite the clamour from a plethora of sources, not least from narrative in the press, to invest in ‘defence’ it has been near on impossible to find a company we are comfortable with which ticks all the boxes. That said, Government spending on defence is set to rise (in the UK from 2.6% of GDP to 3% and then to 5% of GDP by 2035) and provides a multi-year flow of capital into the sector; hence we set our analysts to work.
Prior to the US attacking three Iranian nuclear facilities, and where appropriate (e.g. for clients who have not placed an armaments/defence restriction on their investments), we purchased a holding in the NATO Future of Defence ETF. This is a collective investment comprising of 61 underlying holdings spanning all areas of defence, generating revenues from NATO and NATO allies. This seems like a sensible solution whilst it is comforting to consider any Government defence contracts lost by one holding in this ETF may well be won by another underlying company.
Government spending on defence is set to rise (in the UK from 2.6% of GDP to 3% and then to 5% of GDP by 2035)
Corporate access
by Ashley Baxter
Direct engagement with company management teams, whether through individual dialogue, corporate brokers, or investment banks, remains a core part of our investment process. These interactions allow us to gain deeper insights into the businesses in which we invest.
Unilever
We joined a call with new CEO Fernando Fernandez, who was a surprise appointment in February given that previous CEO Hein Schumacher appeared to be doing a relatively good job, having made some decisive calls to improve the growth profile of Unilever. These included the planned demerger of the ice cream business (on track for the second half of 2025) and a sharper focus on leading brands such as Dove, Hellmann’s, Domestos and Knorr.
After the call, we were reassured that Mr. Fernandez is indeed the right person with the right skill set to lead the next stage of Unilever’s transformation. He demonstrated clear enthusiasm, a strong focus on volume-driven growth (rather than just putting up prices), and a deep institutional knowledge developed over 37 years with the company. Notably, he previously led Unilever’s Beauty division, the business’s best-performing segment in recent years, and earlier oversaw operations in Brazil, where he implemented structural and cultural reforms that yielded significant growth.
Importantly he confirmed that there are “no skeletons in the closet”, something some had suggested due to the abrupt change at the top, and he now plans to focus on the premiumisation of the portfolio and divesting those brands that no longer fit well within the portfolio. This is part of his plan to future proof Unilever’s portfolio and ensure it remains resilient through the economic cycle.
As we approach the earnings season for the second quarter and half-year earnings, our investment managers and research analysts have held several meetings, both virtually and in person, with senior management and investor relations teams. Below are highlights from some of these recent engagements.
Halma
We recently attended the Berenberg UK Corporate Conference where a particular highlight was a oneon-one meeting with the relatively new CEO of Halma, Marc Ronchetti. The discussion focused on:
1. Current trading: Halma continues to generate strong and sustainable organic revenue growth, and this year (fiscal year ended 31st March 2025) has been no exception. Indeed, organic growth of 8% was at the top end of the guidance that was provided at the beginning of the year. Mr. Ronchetti confirmed that most companies within the group are performing well, with the one area of weakness currently in the healthcare space due to further destocking issues, as well as some delays to some customer product launches. There are however signs of a recovery in healthcare and they are confident that this segment will contribute to growth in the 2025/26 financial year.
2. The process and opportunities for continued M&A activity: acquisitions have always been a key part of the Halma investment case, with the contribution from acquired businesses supplementing organic growth. The aim is to buy six to eight businesses a year, adding 5% to the top line. The current pipeline comprises over 600 potential businesses to acquire, so opportunities are aplenty, the majority of which are mostly bolt-on (small) deals although the CEO did not rule out larger deals if they believe the financials and culture are the right fit.
3. Future ambitions: despite the change in CEO there have been no transformational changes, more ‘as you were’ with tweaks at the margin to improve operations where possible. The financial goal remains the same, to double earnings every five years, while maintaining high returns on capital.
Vertiv
We arranged a call with the Investor Relations team at Vertiv, the provider of critical infrastructure and services that ensure the uninterrupted operation of vital applications in data centres. There had been concerns in the market about the long-term order book of Vertiv, but the tone and rhetoric from the team was positive and the recent share price recovery has reflected the positive operating performance across the group.
Importantly they confirmed to us that orders in the EMEA (Europe, Middle East & Africa) region are not being cancelled (one recent market concern), rather discussions and sales cycles are just taking longer than usual due to regulations and logistics. Thus, orders may be ‘lumpier’ than they have been in the past, partly due to the sheer size of orders coming through on a quarterly basis, however they are more convinced today about Vertiv’s position than ever before.
LondonMetric
We met with CEO Andrew Jones, who provided an operational update and insights into the integration of assets acquired through the LXI REIT transaction. This acquisition brought a range of unique assets into the portfolio, including Alton Towers and Thorpe Park, alongside non-core holdings that are now being divested.
Logistics remain the management team’s highest conviction area, with long-term structural trends driving sustained demand. Future acquisitions, such as the recently completed purchase of Urban Logistics, are expected to be concentrated in this segment, whilst the scale gained from these deals is enhancing the company’s access to larger investment opportunities.
The WS Opie Street Funds — Engaging with Third Party Fund Managers
by Edward Sidgwick and Sam Matthews
Clients with portfolios managed within our Fund Portfolio Service are invested in one of the three WS Opie Street Funds, which we manage internally, but which are themselves invested in externally managed collective investments (unit trusts, investment trusts and tracker funds). In doing so, our ambition is to provide clients with an actively-managed and highlydiversified exposure to a broad range of investments, including equities (predominantly), fixed interest, infrastructure and other alternative asset classes.
Our role as managers of the Opie Street Funds includes everything from screening the available universe of collective investments (in order to identify possible candidates for investment), to the ongoing due diligence of those investments shortlisted and selected (informing the decision as to whether to buy, to hold or to sell). A crucial element of this process
is our direct engagement with the fund managers we invest with in order to better understand matters such as their investment philosophies and approaches, as well as their motivations, wider responsibilities and available resources.
When selecting managers, we typically seek to ensure a strong alignment with our own investment approach, a result of which tends to be a significant overlap between the individual stocks held within the third-party funds and the stocks held in the bespoke, direct equity portfolios that we also manage for clients. This overlap makes our meetings with fund managers particularly valuable, not only helping us to form a clearer picture of the fund itself, but also providing insights into the companies the manager invests in, which in turn can help contribute to our own investment decisions.
To demonstrate this concept in action, consider our investment into the Trojan Global Income Fund, which is a core holding in each of the three Opie Street Funds. As longstanding investors in this fund, we enjoy excellent access to the managers – James Harries and Tomasz Boniek from Troy Asset Management – who visit our offices annually, updating our team on the progress of the fund (alongside conference calls as required in the interim). James and Tomasz’s investment philosophy is highly aligned with Barratt & Cooke’s, focused on investment into a relatively concentrated portfolio of globally significant, long-established and highly resilient companies, which stand to deliver attractive shareholder returns long into the future.
Our team really values the relationship that we enjoy with James and Tomasz, not least since it provides an opportunity for us to debate with them the merits of, and risks associated with, the companies in which we both have an interest (whether or not currently invested). This is a particularly valuable opportunity when discussing companies which are not firing on all cylinders currently, such as Coloplast, a Danish healthcare company in which we are both invested and which we were able to debate at our recent meeting. Such discussions will often throw up interesting investment ideas, acting as a catalyst for our analysts and wider investment team to research further, with Texas Instruments, a US semiconductor company, being one such company that our research team are currently monitoring.
Whilst we typically invest into third-party funds which are managed with a similar philosophy to our own, there is also great value in identifying those which are managed with a differentiated approach, helping to challenge our own views, whilst ensuring diversification across investment styles.
To illustrate this point, consider our investment into the Latitude Global Fund, which is a core holding in two of the Opie Street Funds. Like us, the manager - Freddie Lait, founder of Latitude Investment Management - invests with a focus on significant global companies which enjoy durable competitive advantages and straightforward business models. Where Freddie’s approach differs to ours is in his willingness to consider a broader range of industries (for example, being comfortable investing in highly cyclical sectors such as banking), whilst he also employs a particularly strict valuation discipline (whereas we might be comfortable paying a small premium valuation for improved quality or growth).
At a point in time that the global stockmarket is very highly concentrated by both geography (with the US accounting for 64% of global markets) and by industry (with the ‘Magnificent 7’ technology companies accounting for over 20% of global markets), and with many of these dominant stockmarket constituents trading at historically elevated valuations, Freddie’s resulting portfolio is highly differentiated. This approach will lead to a differentiated performance outcome (benefitting in certain market environments, hindering in others) but, importantly, this will provide important diversification benefits. Furthermore, Freddie’s contrarian views help to challenge our own conviction, mitigating the risk of ‘groupthink’.
Hopefully this article demonstrates some of the benefits associated with the investment approach we take within the Opie Street Funds, which has relevance to our investment policy more broadly. We continue to benefit from discussion and debate with third-party fund managers, substantiating and challenging our own views, whilst helping to further expand our investment universe.
Our ambition is to provide clients with an actively-managed and highly-diversified exposure to a broad range of investments, including equities (predominantly), fixed interest, infrastructure and other alternative asset classes.
Portfolio valuation layout
We are constantly trying to improve and evolve the service that clients receive and in recent years this has included our rebranding exercise and the launch of the online client portal. Following these changes we have now reviewed the layout of the quarterly valuation packs which we issue.
While the overall appearance of the ‘packs’ is the most immediate difference, there are several other changes which hopefully clients will find of benefit. These include a commentary on market conditions over the previous quarter and a summary of a client’s investment mandate which was previously only provided alongside the annual review of portfolios.
We have also now incorporated details of the overall asset allocation of portfolios providing both monetary and percentage figures as well as a pie chart, which we hope is a helpful visual illustration of how portfolios are structured. In addition, for all clients we will now detail the income generated from portfolios during the quarter.
Finally, for Discretionary clients we will now provide quarterly performance figures for their portfolio, as well as the corresponding benchmark, and we will look to build in six monthly and annual performance details in future valuations.
Alongside this additional information clients will, of course, continue to receive a full breakdown of the individual holdings within their portfolios, while Fund Portfolio Service clients will still be provided with details of the underlying holdings within the Opie Street Funds.
Hopefully you find the new layout and additional information beneficial.
Charlie Temple-Richards
Those clients who had portfolios managed by CTR (as he was affectionately known in the office) will know he retired in June. He served clients with excellence, expertise and diligence, whilst being a truly fantastic member of the team. On departing the City, some time ago, he headed for Norfolk and had an interview with CWLB where he enquired as to whether there might be a role at Barratt and Cooke on a fairly short-term basis, perhaps 5 years. 24 years on, Charlie finally put down his pen (I think he always rather preferred a pen to a keyboard, testament to the sheer class of the great man). His clients were, unsurprisingly, hugely complimentary about Charlie, not only in his ability to administer their portfolios with great dexterity and integrity but also with regard to the care and attention he took over them and their families. Furthermore, at our investment meetings he always ‘championed’ the requirement for income, an ever-difficult challenge in a day and age of increasing international exposure resulting in yields being harder to come by.
It is with sadness but huge appreciation that we bid him farewell. Fairly recently we had built up his team recruiting two absolutely excellent, fully qualified and experienced Investment Managers in Paul Pearce and Rob Finch Noyes, while Sam Matthews and William Whitmore (Barratt and Cooke stalwarts) sit by their side. I know clients are in brilliant hands. I think the best illustration of how respected and well-liked Charlie was in the office is that his leaving drink was the best attended event I can remember at Barratt and Cooke. I know this was not down to ‘free beer’, it was simply because all our staff wanted to say thank you to Charlie in person. I look forward to seeing him around Norfolk where our conversation can now be entirely about the ‘fun stuff’ rather than work. Thank you, CTR, from all of us at Barratt and Cooke and the clients you looked after, it has been an amazing journey and, I personally, am hugely grateful for your wisdom, support and above all positive energy. To quote you “onwards and upwards” and, yes, we will endeavour to continue to keep “flourishing”!
To quote you “onwards and upwards” and, yes, we will endeavour to continue to keep “flourishing”!
Conclusion
Music is not my forte and unlike most of my peers I do not have a playlist, but if I did Olivia and Flora would certainly have great disdain for it! Indeed, it would probably extend to ‘Eye of the Tiger’ and ‘Bat out of Hell’ on repeat. Anyhow, there is a song which recently re-emerged on the radio, which my family all enjoyed, with the lyric:
“Five hundred twenty-five thousand six hundred minutes”
This refers to the number of minutes in a year, each minute a moment in time. With ‘carpe diem’ being my favourite motto, the lyrics resonated deeply and got me thinking.
When holding an equity or indeed making the sale decision (whether a profit or loss) we typically revisit our original buy rationale to see if there is anything we can learn or improve; this can sometimes be an uncomfortable process, but it is very important indeed and is one of the ways in which we grow as Investment Managers. And so, as we have just celebrated a year of the Labour Government, I was prompted to revisit the July 2024 newsletter where I closed with:
“Come on Sir Keir: “Let’s be ‘avin’ you”. Keep Britain Great. Good Luck, we’re backing you and whilst the outcome of this bet is unknown, we have much hope.”
I think it is fair to say that Sir Keir has presided over a rather underwhelming first 525,600 minutes in office. Indeed, it is quite staggering that a party with such a significant majority, and indeed with such momentum, could find itself so divided, perhaps best evidenced by last minute amendments and highprofile policy U-turns.
The tears from Rachel Reeves following the welfare bill changes at Prime Minister’s questions were a reflection of the sad reality that humans trying to do their best can feel huge pressure when falling terribly short. She is taking much heat and Sir Keir Starmer would do well to support her as a human being, rather than hide behind her. After all, these really are his policies.
Let’s hope the Labour Party can hit the reset button and have a better second year in office, it’s in all of our interests (both individuals and corporates). We all have our own political persuasions but there is unlikely to be an Election for four years and Britain requires strong leadership in the interim. The noise around ‘who will be the next PM’ is somewhat unhelpful. Sir Keir Starmer was elected in a democratic vote so let’s hope he can crack on and deliver what he promised: GROWTH.
To end on a better note, three months ago we were in the midst of market turmoil as President Trump was blowing his trumpet at full booming pitch. Businesses were terrified as he ramped up the tariff war. Subsequently, he has put a mute in that trumpet, softening his stance and with it share prices have bounced back strongly. That is not to say we are out of the woods; indeed we are comfortable retaining a higher allocation to fixed income investments within portfolios as further market volatility cannot be discounted. Indices and benchmarks really are ‘risk on’ right now, but portfolios are well set.
William Barratt Chairman
July 2025
July 2025 equity suggestions
* Equivalent Gross Redemption Yield for Index Linked Gilts assuming RPI inflation averages 3% or 5% to redemption.
** Price adjusted for inflation (please note the published price may be different as it does not include accrued inflation)
FTSE 100 – 1 year
FTSE 100 – 5 year
Source: Iress
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