Fund Factsheet

Fund Aim

The Company’s investment policy is to invest in shares issued by small and mid-sized listed or traded companies globally with a market capitalisation (at the time of initial investment) of between £500 million and £15 billion. The Company’s approach is to be a long-term investor in its chosen stocks. It will not adopt short-term trading strategies. Accordingly, it will pursue its investment policy by investing in approximately 25 to 40 companies.

The Investment Manager focuses on investing in those companies it believes can compound in value over many years. It seeks to achieve this by selecting companies that have an established track record of success, such as having already established a dominant market share in their niche product or service or having brands or patents which others would find difficult, if not impossible, to replicate. The Investment Manager believes such SMID sized companies tend to out-perform large companies and that there is also an investment opportunity to take advantage of greater discrepancies between the share price and valuation of SMID sized companies, in part due to lighter research coverage and less information being available on them. SMID sized companies tend to have higher expected returns but also higher expected risk, defined as price volatility (a measure of how much its price moves over time), when compared to larger companies. However, adding a small and mid cap portfolio to a large cap portfolio can raise expected returns without increasing risk, due to the different risk and return characteristics that SMID sized companies provide.

The Investment Manager seeks to invest in SMID sized companies that exhibit strong profitability that is sustainable over time and generate substantial cash flow that can be reinvested back into the business. Its strategy is not to overpay when buying the shares of such companies and then do as little dealing as possible in order to minimise the expenses of the Company, allowing the investee companies' returns to compound for Shareholders with minimum interference.

The Investment Manager looks to avoid companies that are heavily leveraged or forced to rely upon debt in order to provide an adequate return, as well as sectors and industries that innovate very quickly and are rapidly changing. It instead focuses on companies that have exhibited an ability to continue outperforming competitors and will look for companies that rely heavily on intangible assets in industries such as information technology, health care and consumer goods. The Company's investments will be long-term and the Investment Manager will not be forced to act when market prices are unattractive.

Past performance is not a guide to future performance.

Performance Overview, % Return

¹Source: Bloomberg, starting NAV 1000, net of fees.  ²MSCI World SMID Index, £ Net, source: www.msci.com.
³Bloomberg/Barclays Bond Indices UK Govt 5-10yr, source: Bloomberg^{.  4}£ Interest Rate, source: Bloomberg.  *From 19.10.18

Portfolio Comment for March 2024

We acquired a position in Choice Hotels International once it abandoned its bid for Wyndham Hotels and Resorts. It is a high quality franchised hotel group with a strong growth pipeline and high returns on invested capital. The top 5 contributors in the month were Diploma, Moncler, Rational, Cognex and Paycom. The top 5 detractors were Ambu, Sabre, Temenos, Verisign and Verisk Analytics.