Monthly video update – April 2018 Alan Porter on record levels of global M&A and how sustainability factors are at the forefront of his mind as AGM season gets underway 6 April 2018 Play Video Alan Porter with an update on Securities Trust - April 2018 What caught your eye this month? Global mergers and acquisitions are at record levels, with the strongest ever start to the year in M&A activity in the first quarter. Bankers claim part of the reason for this increased activity, other than continued low interest rates, has been a boardroom desire to head off disruptive technological threats and accelerate growth. By contrast, a Dutch paints & coatings company, purchased over the month, is putting its focus on the core business, rather than M&A to preserve its long-term future. We believe the recently announced sale of its specialty chemicals business, should help accelerate growth and profitability. What currently interests you? Academic studies show companies with superior sustainability practices demonstrate better operational performance. Because of this, a vital part of our investment process is understanding the environmental, social and governance risks to a company’s sustainable growth and what management is doing to mitigate them. Indeed, ESG factors are at the forefront of our minds as the busy AGM season starts in earnest. As ever, we are interacting with companies on how we intend to vote, especially if this is against management. Two notable recent decisions to vote against management have been a share issuance request not including pre-emptive shareholder rights, and a company where the incentive plan has not been capped or linked to clear targets. What is the outlook for the next few months? Volatility is back in markets and we are sure the period of increased market swings seen this quarter will not the be the last. It is worth remembering a fall in company equity valuations does not affect the business’ operating performance in the short term. We believe patient investors will be able to take advantage of the market volatility in due course. We remain confident in our investment style, targeting high-quality growing companies which produce attractive cash-flow returns that support sustainable dividends.