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 were up in August and the Fund outperformed its benchmark modestly. Beneath the surface, market trends were lacklustre with the usual Summer lull impacting trading volumes, and, to a lesser extent, newsflow.

The food retail sector continued to perform well. A further set of bids for WM Morrison moved its shares up 6% relative to the benchmark, with Tesco up a similar amount. 

We saw continued strength in our portfolio companies with results from Kenmare, Keller, WPP and Raven Group all better than expected. There has been virtually no negative stock specific newsflow in recent months, which, given the low valuations, bodes well for future performance. 

The banking sector modestly outperformed with all of our stocks here producing above forecast results while emphasising strong capital return messages. 

On the negative side ABRDN (the new name for Aberdeen Standard Life) saw its shares fall despite robust results. The non-life insurance sector fell slightly due to news on loss events (e.g. various US wind storms) and Phoenix went ex-dividend badly. Phoenix now yields 8%, which, given its low risk / hedged positioning and its predictability (as back books run off), is astonishing. 

There has been a material uplift in dividend expectations across the Fund in the last two months. This has been driven by: (a) the better-than-expected economic recovery; (b) the strong recovery in the banking sector - partly linked to point (a) - which has meant the PRA has moved capital allocation decisions ‘back to the boardroom’; (c) material free cashflow in the mining sector which has translated into better-than-expected dividend flows; and (d) both the UK oil majors lifting dividends earlier than expected. The percentage of our portfolio companies conducting buybacks alongside dividends is testament to the strength of balance sheets across the Fund. Much of the oil, mining and banking sectors are actively buying back shares (with six of our top ten active positions included in this list). 

In January we indicated we were forecasting growth of 37% in 2021 on a cash dividend paid basis. We upgraded this to 42-43% at the end of June. Due to the factors mentioned above we now increase this to ‘approaching 60%’. This is based on the expected cash dividends to be received in 2021. If we look at our fiscal year 2021 forecast dividends (which include the final dividends which will be paid in the first part of 2022) versus fiscal year 2020, our forecast has risen from the c. 60% growth (made in January 2021) which was upgraded to c. 67-68% in June to ‘above 80%’ now. 

Looking ahead to 2022 our forecasts show continuing strength in dividend growth, with an aggregate picture indicating the Fund’s dividend will get back to or above where it was in 2019, in late 2022 / early 2023. 

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.

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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.