The Fund aims to achieve long-term capital growth by investing in UK listed companies across the broad market cap range.

The Fund finished a very good year in strong fashion. Particularly pleasing over 2020 was the fact that all the performance came from stock selection and was very broad based in terms of its nature. In addition, we were one of the few funds to outperform both pre- and post-vaccine, when the market saw a noticeable style shift, and we were also able to bring in a number of new names into the portfolio that are clear structural beneficiaries in a post-pandemic world. With very significant fundamental progress achieved across a huge swathe of our companies’ assets, a hugely compelling valuation disconnect, and with the UK stock market finally open again to international capital, we remain very optimistic for the future.
Brexit and Covid aside, it was a relatively quiet month from a newsflow perspective. Chemring’s results were significantly ahead of expectations on a number of fronts, and its investment in automation and product development continues to bear fruit. Puretech announced further clinical progress across important strategic assets, and NCC benefited from the heightened cybersecurity concerns after the extended hack on the US Government. Pleasingly, there were no material negative contributors.
From an activity perspective we exited our position in Impax Asset management (purely on valuation grounds), Standard Life (where we believe the market is now fairly reflecting the value of its hidden assets it was previously ignoring) and Countryside Properties. Proceeds from the latter were rotated into PRS Reit, which gives identical exposure to the structural growth in urban partnerships and affordable family house under-provision, but does so for a more compelling valuation, and as such represents a logical trade to keep the portfolio risk/reward integrity intact.
 

From a humanitarian viewpoint 2020 is certainly not a year that will be fondly remembered by any stretch of the imagination. The economic and social consequences of the pandemic will also be with us for a very substantial period of time with profound short-, medium- and long-term consequences, issues which we have been giving tremendous thought over the last few months as you might expect. Fractures will need to be healed too and political divisions repaired.
But on a brighter note it also brought extraordinary medical innovation and some truly inspiring acts of courage and selflessness. It massively accelerated technological progress and adoption, creating greater connections, more seamless and efficient commerce and opening up profound new opportunities for the nimble and the bold. And from an investment perspective it was a decent year, with meaningful progress across most asset classes, and with even the beaten-up UK finally getting some respite towards the end of the year with a resolution (of sorts) of the interminably painful Brexit process.
Covid-19 challenges remain and will continue to dominate near term thinking, but with vaccines ramping up the outlook is less murky. Consumer balance sheets are strong and with political risks retired on both sides of the Atlantic the incentive for companies to invest for growth are clear. With the cost of capital still residing at multi-generational lows, the ramping up of corporate activity we saw in Q4 is a logical reaction and one we expect to continue; and, if history is a good guide, expect to disproportionately benefit from.
 

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. All performance figures illustrate performance from the first full day that the Fund held investments. During the period 6 November 2001 to 7 May 2003 the performance record is based on the pre-existing share class that had a higher management fee.

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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 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.