Aberdeen Life UK Equity Income Fund
Objective
To provide exposure to an actively managed portfolio which primarily consists of UK equity and equity-related securities
Manager's Quarterly Report
July 2010
Market review
- UK equities fell in the second quarter, weighed down by lingering fears that Greece’s debt woes
may spark a fullblown regional crisis and concerns that the government’s austerity measures
could dent the fragile domestic recovery. Uncertainty over the general election, which ended
with a coalition government, coupled with potential credit ratings downgrades in light of the
country’s deteriorating fiscal wellbeing, exacerbated market jitters.
Economic indicators were muted: business and consumer confidence dipped in the wake of the
planned government spending cuts. The manufacturing sector’s recent recovery was short-lived
as factory output dropped, while export growth slowed, depressed by the Continent’s debt
woes and the falling euro.
Fund review
- During the quarter, we sold Arriva, after the transport operator accepted Deutsche Bahn’s
takeover offer, while paring Weir Group and Centrica following their strong relative
performance.
Against this, we took advantage of the recent market weakness to top up Sage, which has a
strong brand, diversified customer base and good recurring revenues, and BHP Billiton, owing to
its attractive long-term growth opportunities. We also added to BP after conducting extensive
due diligence in the wake of the Deepwater Horizon accident.