The Fund aims to achieve long-term capital growth and to generate a dividend yield that is above that of the FTSE All-Share Index average. The Fund focuses predominantly on stocks within the FTSE 350 Index that generate a prospective yield above that of the FTSE All-Share Index average. The Fund's performance benchmark is the FTSE All-Share Total Return Index denominated in sterling.Please note that for capacity reasons the Fund is now 'soft-closed' to new direct investors.

Stock markets continued to edge higher across the month. Bond yields were under pressure during the latter part of the month, which meant the pause in the rotation towards areas of the market where the Fund has higher exposure continued. Recent economic data coupled with continued positive stock specific news flow suggest this is a lull before another move forward in both bond yields and further rotation. In this regard, it feels a bit like February.

Company-specific news flow remained upbeat, with Lookers, Redde and Eurocell all warning to the upside. Common themes in their narratives were shortages, raw material pressures and consequent selling price increases or the imposition of surcharges. The widespread commentary from companies around cost pressures and price rises, together with the durability of the economic recovery, supports our central case that inflation will be more enduring than policy-makers expect. 

Other strong performances came from ITV, recent new addition International Personal Finance, Drax and our two recruitment stocks (Sthree and Page Group). 

Sector-wise, the large oil stocks performed a little better, with BP outperforming Royal Dutch Shell. We remain very positive about BP’s pivot towards new energies, and think it is underappreciated by the market. The mining sector, which has been strong year to date, weakened during the month. 

Banks were mixed, with Barclays down 5% relative to the Fund’s benchmark at one end of the spectrum and Lloyds up 10% relative at the other end. This enabled us to continue our re-positioning within the sector.

There were two specific areas of weakness, Vodafone (where increased capex guidance was poorly received) and Randall & Quilter (which changed its dividend policy to fund growth prospects). 

Randall & Quilter was extremely disappointing given the company’s history and forward-looking free cashflow profile of the business, which is very clear and highly positive. In our view, the board should have grown into the current dividend rather than setting it on a ‘look back’ basis and confusing the ‘stock of capital’ with the ‘annual flow of capital’. However, we believe the dividend will quickly grow back to where it was while the stock remains very cheap, in our opinion. 

Data shown net of fees, net income reinvested. Please note that all fund performance is shown against the FTSE All-Share TR 12pm adjusted. Performance of other share classes may vary and is available on request.Where shown, monthly returns table shows compounded discrete monthly performance.

FTSE International Limited (“FTSE”) © FTSE 2017. The Industry Classification Benchmark (“ICB”) and all  rights in it are owned by and vest in FTSE and/or its licensors. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence. Neither FTSE, nor its licensors accept any liability for any errors or omissions in the ICB. No further distribution of ICB is permitted without FTSE’s express written consent.

Past performance is no guarantee of future performance. The value of an investment and the income from it can fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested. The annual management charge is deducted from the capital of the Fund. This will increase the income from the Fund but may constrain or erode potential for capital growth. The Funds investment include shares in small-cap companies and these tend to be traded less frequently and in lower volumes than larger companies making them potentially less liquid and more volatile. 

The information set out below relates to the Irish-domiciled fund which has been established for this strategy. To date this fund has not yet been launched.  The UK-domiciled fund follows the same investment approach but is not required to comply with the full requirements of SFDR.

Amongst other characteristics, the Fund promotes environmental and social characteristics and invests in companies that apply good corporate governance. JOHCM Funds (Ireland) Limited, the Fund’s manager has therefore categorised the Fund as meeting the provisions set out in Article 8 of EU Regulation 2019/2088 on sustainability-related disclosures in the financial services sector (“SFDR”).  

J O Hambro Capital Management Limited (“Investment Manager”) seeks to invest only in companies that meet minimum sustainability practices and have a coherent and well-articulated approach to sustainability to remain relevant to their customers, investors and society in general. The Investment Manager recognises that companies which fail to do so will progressively struggle.   

In order to achieve the above, the Investment Manager uses ESG scores to assess and monitor its investments and seeks to exclude businesses that are rated as ‘CCC’ by MSCI ESG or are assessed as ‘non-compliant’ with the UN Global Compact.  When an investee company no longer complies with any of these standards, the Investment Manager will engage with that issuer for a period of up to 18 months to allow the company to implement the necessary change, otherwise the Fund will exit that position.  The selection criteria may not be disapplied or overridden by the Investment Manager. 

The exclusion criteria referred to above will be applied prior to making any investment and the Fund’s portfolio will be monitored for any investments which breach these exclusion criteria on a periodic basis. For this purpose, the Investment Manager will rely on data (and the ESG definitions aligned with that data) from its third-party provider, ISS, or such other source as the Investment Manager determines.  We utilise the UN Global Compact assessment of another third-party provider, Sustainalytics. 

In order to measure and monitor the environmental characteristics of the Fund, the Investment Manager will review the carbon footprint of the portfolio, the trajectory of change of its investee companies’ ESG ratings and environmental data published by those companies.  For the social characteristics of the Fund, the Investment Manager will review whether investee companies have implemented appropriate policies and structures to support sustainable business practices.   

Investee companies must follow good governance practices. This requires investee companies to adhere to minimum standards in various areas including sound management structures, employee relations, remuneration of staff and tax compliance. The Investment Manager is a signatory to the UK Stewardship Code 2012, is requesting to be a signatory to the UK Stewardship Code 2020 (together the “Code”) and is a signatory to the UN Principles for Responsible Investment (the “UNPRI”). As a signatory to the Code and the UNPRI, the good governance practices of investee companies are assessed by the Investment Manager prior to making an investment and periodically thereafter. 

The Fund uses the FTSE All Share Total Return Index for performance fee calculation purposes only and it is not, nor is it intended to be, aligned and/or consistent with the environmental and social characteristics promoted by the Fund.