Global stock markets continued their recovery from the war-related sell-off earlier in the year. Company earnings remained robust, a ceasefire deal between the US and Iran was agreed, and the oil price fell rapidly back towards pre-conflict levels.

Evenlode Income rose +1.9% compared to +0.7% for the FTSE All-Share and +0.5% for the IA UK All Companies Sector. The strongest contributors to return during the month were Unilever, Bunzl, Informa and Intertek. Unilever shares began to recover following the fall in the oil price - a helpful tailwind for profitability. Bunzl and Informa both released well received trading statements, with Bunzl upgrading guidance. The most negative contributors were CME Group, LSEG and RELX. CME Group shares fell following the Commodity Futures Trading Commission approval of perpetual futures^[1]. These contracts target retail investors, not the institutional investors that CME primarily serves - we continue to see good growth prospects for CME from increased digitization of trading and adoption of derivatives. RELX and LSEG fell on no specific news. These stocks have been de-rated due to AI concerns, but we think their economic moats remain strong, and they are harnessing generative AI to enhance their services and drive efficient growth.

In terms of portfolio changes, we added to a range of positions whilst trimming back our positions in Halma, Diploma and Games Workshop (all for valuation reasons), and Intertek and Compass (to manage position sizes).

The fundamental performance of underlying holdings remains good, with 2026 forecasts standing at a similar level to early January (+5% organic revenue growth, +8% organic operating profit growth, and double-digit earnings per share growth). The recent drop in the oil price from its highs should also be a helpful tailwind at the margin for a range of holdings. Meanwhile the free cash flow valuation of the portfolio continues to stand at the most attractive it has been since the early days of the fund, over sixteen years ago. Remarkedly, the portfolio is cheaper now than it was even in the depths of the Covid sell-off in March 2020.

We would like to thank our investors for their patience and continued support through a difficult first half of the year from a performance perspective. We remain confident in the quality of the businesses held in the fund and believe the strategy is very well placed to reward patient capital over time.

^[1] a popular trading product (a leveraged bet on an asset price) with no expiry date.