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

This month, the fund showed its resilience, performing in line with the market despite the unattractive UK news flow that dominated the agenda. Yet there are several world class assets and franchises that trade at substantial discounts to their international peers. The market seems to ignore the dysfunctionality and technical anomalies in the small cap market and the notable acceleration in UK M&A, with now nearly $60bn of assets taken over or under offer in 2022 alone. Higher inflation and a falling exchange rate, raising the risk of higher interest rates, combined with a chaotic race for the premiership, depressed sentiment and heightened social unrest. Aside from monetary conditions, retail sales, PMI and other economic data have remained broadly positive. This is especially the case with UK employment, where demand is well ahead of supply. The ongoing uncertainty and external pressures contributed to the slowdown. 

Among stocks detracting from performance, rising energy costs and a delay in gaming reform impacted Rank, at the same time, we saw some rolling over of our technology assets (FD Technologies, NCC and 1Spatial) despite continued solid fundamental progress.

On the positive side, we had two highly significant value accretive events in companies previously mentioned. Puretech’s part owned asset, Karuna, had promising trial data, enhancing the opportunity and value of its lead compound. Puretech trades on a negative enterprise value, i.e., less than the sum of its cash and listed stakes, leaving the multi-dimensional therapeutic portfolio in the equity price for literally nothing. In fact, despite the 30% rally in the stock over the month, the price was lower than it started. As a result, we have continued to let the position run.

Secondly, Igas, delivered a highly encouraging trading update and is witnessing a radically changed environment and attitudes towards its world class, on-shore shale portfolio. We have consistently highlighted this as a completely free, high impact asymmetric option in the equity price and are pleased to see that inherent value being recognised. The shares doubled over the month. Igas represents one of the many assets in the portfolio we believe have significant upside potential.

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.

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. The Investment Manager refers to the ten principles of the UN Global Compact, which promote sustainable and responsible corporate development in order to make globalisation more socially and ecologically focused. They fall into the categories of the protection of human rights, maintenance of appropriate labour standards, promoting environmental responsibility and the prevention of corruption.   

In order to achieve the above, the Fund excludes investment in those companies it considers “non-sustainable”. The issuer of a security is considered “non-sustainable” if it is “non-compliant” with the UN Global Compact. The selection criteria may not be disapplied or overridden by the Investment Manager. We utilise the UN Global Compact assessment of our third-party provider, Sustainalytics. 

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 a third-party provider, or such other source as the Investment Manager determines.  

In order to measure and monitor the environmental characteristics of the Fund, the Investment Manager will review the carbon footprint of the portfolio and environmental data published by its investee 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.  The Investment Manager will also consider data provided by a third- party data provider, although this will not necessarily directly influence whether a company will be bought or sold by the Fund. 

Although the Fund may invest in economic activities that contribute to an environmental objective within the meaning of the EU’s Sustainable Finance Disclosure Regulation (SFDR), the Investment Manager is not currently in a position to assess the proportion, as a percentage of the Fund’s portfolio, of investments in environmentally sustainable activities which are aligned to the EU’s Taxonomy Regulation (TR) (Regulation (EU) 2020/852) and amending Regulation (EU) 2019/2088.

This is due to a lack of reliable, timely and verifiable data for the Investment Manager to make a full and accurate assessment of the investments of the Fund against the TR’s Technical Screening Criteria in respect of climate change mitigation and climate change adaptation. It is also important to note that given the geographical focus of the Fund’s strategy, companies within the investment universe might not be under any obligation to provide the data required under EU legislation.

As a result, the Investment Manager is unable to determine whether the underlying investments in the Fund contribute to climate change mitigation and/or climate change adaptation, or whether the Fund has investments in economic activities that qualify as environmentally sustainable pursuant to the TR. As such, it has been determined that, 0% of the Fund’s investments are in economic activities that qualify as environmentally sustainable under the TR.

The Investment Manager is keeping this situation under review and will revisit the TR disclosure requirements once sufficient data is available.

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. JOHCM has met the expected standard of reporting under the UK Stewardship Code in 2021 and has been approved as a signatory. 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.