Market Review:
The QEP Global Core strategy comfortably outperformed its reference index in the final quarter to bookend a strong year of gains driven by strong stock selection from a variety of areas. At a high level, whilst our positioning in better value stocks was beneficial during the "reflation" trade that characterised most of the first half, our focus on quality increasingly supported performance as the year progressed. Gains during 2021 were broad based but primarily driven by overweight positions in attractively valued areas while avoiding poor quality ones, particularly when accompanied by premium multiples. As part of this, avoiding many of the 'stay-at-home' beneficiary stocks also supported returns. More specifically, our preferred overweight in industrials (e.g. electrical equipment, construction supplies, machinery) contributed positively, while avoiding areas of poorer quality (defence and aerospace) also assisted. Similarly, stock selection was strong within technology, especially by sidestepping the more expensive names in payments and application software. Elsewhere, in the consumer discretionary sector, our holdings in homebuilders and auto retailers were beneficial, as was our avoidance of the more expensive areas of online retail.

Portfolio Overview:
Over the course of the last quarter of the year, we actively trimmed exposure to more richly valued and over-extended areas of the market while continuing to reposition the strategy towards best-in-class names from a business quality perspective. As of the end of last year, some of the largest portfolio overweight exist within the health care, communication services and consumer staples sectors where we continue to find best-in-class quality opportunities that continue to trade at attractive valuations. Conversely, the key underweights in the strategy remain utilities and real estate, with our view on both sectors remaining unchanged. We continue to view both as low quality, highly leveraged, unappealing in valuation terms and with a forward-looking earnings trajectory, that is at best flat. The QEP research agenda over the past year has focused on integrating growth and sentiment terms into our stock selection process, which has been beneficial. Alongside this, we continue to focus on longer-term thematics, most of which have a sustainability focus, along with more detailed industry analysis on the basis that the next few years will be far more nuanced than the recent past, whilst still maintaining our strategic focus on Value and Quality.