Having held an underweight position to real estate, we raised the portfolio's exposure through new positions in the U.S. and Japan over the quarter. We also moved further overweight to financials, finding an opportunity in a large U.S. bank. We retained our underweight to IT but, within this, made a number of switches to our holdings. Within the health care sector, we reduced our exposure to the U.S. managed care space. Our major overweight sector positions at the end of June remained financials, utilities, and, to a smaller extent, health care. The largest underweight sector positions included consumer discretionary, IT, and communication services.

Closed Underweight to Real Estate

As the review period began, the portfolio had a longstanding underweight in real estate. Over the course of the quarter, we added exposure by initiating positions in Equity Residential and Mitsui Fudosan Logistics.

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• Equity Residential: This company is the largest publicly traded U.S. apartment REIT. With its high-quality, bicoastal urban assets, the portfolio is, in our view, hard to replicate and is run by a strong operating team. We see long-term value accretion being driven by management that knows how to allocate, while a strong balance sheet provides additional downside protection.

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• Mitsui Fudosan Logistics: We see a decent growth runway from here for this Japanese real estate developer, thanks to its top-tier leasing portfolio and extensive pipeline, while low leverage and broad scope for acquisitions is of additional support. We also like the stock for its solid dividend.

Sold Managed Care Exposure Due to U.S. Election Risk

We eliminated our positions in two U.S.-based managed care companies, UnitedHealth Group and Anthem, over the course of the review period. In our view, their businesses are materially exposed to what could be a long election overhang, and we see risk of multiple compression under several election scenarios.

Although these trades reduced exposure to the broader health care sector, the portfolio retains an overweight position.

Identified an Opportunity in a U.S. Bank

Over the course of the quarter ended in June, we moved further overweight to financials. We initiated a position in Bank of America, taking advantage of its attractive valuation. Management at the large U.S. bank has done well to navigate several headwinds and protect profitability in the continued low-rate environment. The bank is also being savvy about appealing to younger customers, which should feed into longer-term deposit growth.

Switched Holdings Within IT

Over the course of the review period, the overall weighting of the portfolio in the IT sector remained broadly unchanged. However, within the sector, we made a number of switches to reflect our evolving view. We initiated a position in Qualcomm, funding this in part by selling out of our holdings in Booz Allen Hamilton and TDK.

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• Qualcomm: We like this U.S. semiconductor and telecommunications equipment business, which trades at an attractive valuation relative to the extent of its earnings power. We view Qualcomm as the leading 5G modem manufacturer in an improving industry structure, where the recent exit of a key competitor has multiplied the company's market share.

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• Booz Allen Hamilton: Our position in this U.S. management consultancy business played out well during our holding period, but we now see increased risk in the form of a bribery investigation, and its fuller valuation no longer befits our model.

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• TDK: We exited our position in this Japanese electronics conglomerate after owning the stock for a couple of years. TDK's battery business has been a key driver of share price performance, but we see the product cycle being less conducive from here. We are also wary of increasing debt levels, which has dampened our view of the stock's risk/ reward profile.