The Fund aims to achieve consistent capital appreciation over the longer term by investing in stocks of primarily UK-listed large and mid-sized companies. Up to 10% of the Fund may be in international stocks. A thematic, top-down process is used to identify stock ideas and then married to a rigorous approach to valuation. Portfolio construction is benchmark-unaware with roughly equally-weighted positions in typically 30-40 stocks reflecting high conviction management.

Our portfolio remains well positioned to benefit from the evolving post pandemic growth drivers that are staring to re-shape the global economy.

Johnson Matthey reported good progress in both battery materials for electric vehicles and in its hydrogen business that has been growing at 35% per year since 2015. Mondi reported strong demand across their packaging markets, supported by structural growth drivers of e-commerce and the move to recyclable packaging. Next reported that their investment into its online business has enabled a 40% increase in the customer base over the last two years and the company expects 30% growth in online sales this year combined with improved margins which are already well ahead of industry competitors.

Our portfolio of attractively valued companies that are positioned for growth can attract the attention of investors with shorter-term time horizons. UDG, a company that we expect to benefit from increasing spend and tightening regulation in healthcare markets received a takeover approach from a private equity firm. Our view is that the price offered does not fully reflect UDG’s growth prospects and strong balance sheet. We have relayed this message to the company and its advisors.

Homeserve’s shares fell during the month after the market was disappointed by the short-term profit impact of new systems investment. The company offers a long runway of growth opportunities in multiple geographies. It is led by one of the most entrepreneurial management teams in the UK that has a long track record of investing in new growth opportunities. We took advantage of the market’s short-termism and added to our position.

At the start of the month we became concerned about a mining tax proposal in Chile that would negatively impact our position in Antofagasta. We spoke directly with a Santiago based mining tax expert and decided to exit the position whilst booking a healthy profit. Implementing our sell discipline when the facts change remains a key tool in our focus on preserving client capital.

We met with management of Ashtead to encourage them to do more to reduce their carbon footprint. For a company that is expanding its operations and delivering strong revenue growth, reducing carbon emissions at the same time can be challenging. Ashtead has committed to increasing the electrification of its vehicles and to improving its environmental disclosure. Both of these actions are having a positive impact on growth as their clients increasingly look for suppliers with better sustainability credentials.

The portfolio remains a concentrated list of attractively valued businesses with excellent growth prospects.

Data shown net of fees, net income reinvested. Performance of other share classes may vary and is available on request. Please note that all fund performance is shown against the FTSE All-Share TR Index. 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.

J O Hambro Capital Management Ltd is licensed by FTSE to redistribute the FTSE All-Share Total Return Index. All rights in and to the Index and trade mark vest in FTSE and/or its licensors (including the Financial Times Limited and the London Stock Exchange PLC), none of whom shall be responsible for any error or omission in the Index.

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 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 strategy, 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”).  

In looking for investments, J O Hambro Capital Management Limited (“Investment Manager”) seeks to avoid investing in companies which contribute to significant social and/or environmental harms, and thereby fail environmental, social and governance (“ESG”) key performance indicators.    In order to achieve this, the Investment Manager uses ESG scores to populate its own proprietary ESG scorecard which it uses to assess and monitor its investments.  The Fund seeks to avoid those companies it rates as “Failing to meet standards” on that proprietary scorecard. The selection criteria may not be disapplied or overridden by the Investment Manager. 

When an investee company is rated as ‘Failing to meet standards’ on its proprietary ESG scorecard, the Investment Manager will engage with that issuer for a period of up to 18 months to allow the company to implement change, otherwise the Fund will exit that position.  

The team recognises that ESG factors can create risks and opportunities for companies and look for companies who may benefit from this. 

In order to measure and monitor the environmental characteristics of the Fund, the Investment Manager utilises a proprietary scorecard which measures each investee company against not only financial and business characteristics, but also relevant social and environmental metrics.  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. 

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.