September was a volatile month, in which a relatively subdued -1.0% return in the FTSE All-Share Index (on a total return basis) masked some large underlying moves in share prices, driven by rising energy prices and rising bond yields. The rise in the oil price, as demand recovers and inventories are gradually drawn down following the pandemic, led to energy companies held in the portfolio such as Jersey Oil & Gas performing well. An even larger move upwards in the UK gas price meant that Serica Energy, a North Sea oil & gas producer (exposed primarily to gas), was the largest individual contributor to performance in the portfolio.

At the aggregate level, the portfolio holds an approximately equal amount to the FTSE All-Share benchmark in oil & gas companies. However, the makeup of the holdings is very different. For example, the portfolio would hold neither Royal Dutch Shell nor BP, as we have preferred to hold smaller companies, that in our view, should add more value over time.

One new position was established during the month in Oxford Nanopore. We saw Nanopore as an opportunity to gain exposure to what could be one of the market leaders in a potentially very large future end market. However, the route to scaling up sales from current modest levels is unlikely to be linear.

Volatility Expand

The rate and extent at which the price of a portfolio, security, or index, moves up and down. If the price swings up and down with large movements, it has high volatility. If the price moves more slowly and to a lesser extent, it has lower volatility. It is used as a measure of the riskiness of an investment.