She has taken profits on cyclicals and financials that have performed well and reduced positions in stocks viewed as vulnerable to dividend cuts, including a complete exit of manufacturing technology business Smiths Group.
She has brought into the portfolio Inchcape, Invesnsys, Melrose, Pearson, Société Générale and Tesco.
Noffke is currently seeing stronger financials opportunities overseas with holdings in Swedbank and aforementioned SocGen, both permitted into the fund through an allowance of up to 20% in non-UK companies. She is currently at 8% of this allowance.
While claiming not to invest thematically, she said her holdings broadly fell into four groups – sustainable real dividend growth, free cash flow generation, increased payout ratio and sustainable and attractive yield.
According to the latest update note from Winterflood, following a meeting on October 24, the manager expressed concern over the timing and impact of US stimulus withdrawal, but expected global monetary policy to remain accommodative.
“In the US the debt ceiling is likely to continue to hang over markets until a longer-term resolution is found,” the note said.
Noffke said she believed equity valuations remained “undemanding”, still below the long-term average despite recovering from the 2008/09 lows. She also had faith in the portfolio’s cyclical holdings, believing value still existed.
Winterflood said the performance had improved following several changes to the fund – including manager, breadth of holdings, introducing gearing and option writing, but the dominance of her peer group meant the manager was still underperforming relative to the competition.
The £191m trust has a current yield of 3.7% – down from its September figure of 4.5% – and is trading at a premium of 1.4%. NAV total return has been 48.2% over three years to 24 October compared with the FTSE All-Share return of 34%.
