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SVM All Europe SRI Fund

SVM All Europe SRI Fund

Improving the responsibility of companies

Launched in 2006, this fund aims to achieve long term growth by investing in UK and European businesses that meet SVM's socially responsible criteria and where the current valuation offers an opportunity.

This Fund looks to improve corporate behaviour by using its influence as a shareholder in the most constructive way possible.

SVM All Europe SRI Fund

Improving the responsibility of companies

Launched in 2006, this fund aims to achieve long term growth by investing in UK and European businesses that meet SVM's socially responsible criteria and where the current valuation offers an opportunity.

This Fund looks to improve corporate behaviour by using its influence as a shareholder in the most constructive way possible.

Overview

Fund Objective

The Fund aims to achieve medium to long-term capital growth and to outperform the FTSE World Europe Index. It adopts a positive engagement approach toward investment and enters into meaningful dialogue with companies regarding social and environmental issues. Investments are made in European stocks and other permitted securities.

Approach

SVM All Europe SRI Fund invests in well-managed, attractively priced businesses while at the same time seeking to improve their awareness, reporting and impact on the environment, society and corporate governance (ESG).

Our fund, which can invest right across the market capitalisation spectrum, is perfectly positioned to take advantage of the host of investment opportunities that this presents. We aim to find “hidden gems” with a strong earnings profile. We take a private equity-style approach to analysing their intrinsic value and their prospects for long-term earnings growth.

Analysis and research on ESG performance is an integrated part of our investment approach. Our purpose with each investment in the portfolio is to drive activities and processes that will improve companies’ impact on the environment and society. Companies are scored on a range of ESG criteria (with certain industries excluded altogether). We then engage with company management and invest on the basis of clear evidence and ongoing potential for improvement.

Investing for ESG impact in these undiscovered opportunities, you will own a portfolio that is different to most other Pan-European equity funds, and will perform differently too. The fund is designed to access specific growth opportunities in improving companies in Europe while diversifying your Pan-European equity exposure away from mainstream investments and indices.

You can invest with confidence in a fund that not only capitalises on our ability to identify undiscovered investment opportunities but also maximises the opportunity to influence corporate behaviour for the benefit of both the environment and society.

Fund Details

Launch Date31 October 2006
BenchmarkFTSE World Europe Index
IA SectorEurope inc UK
Type of SharesAccumulation
XD Date31 December
Pay Date30 April
Fund Size£19.7m

Data as at 31/08/2020.

Fund Managers

Neil Veitch
Global & UK Investment Director
14
Years at SVM
23
Industry Experience

Neil joined SVM in 2006 to manage the SVM UK Opportunities Fund. He is also lead manager of the SVM World Equity Fund and co manager of the SVM All Europe SRI Fund.

Prior to joining SVM, Neil was responsible for UK mid & small cap investments at Dutch merchant bank, Kempen Capital Management, where he also managed pan European mandates.

Academic Qualifications:
BA (Hons) Economics
MSc Investment Management

Professional Qualifications:

CFA

Hugh Cuthbert
European Investment Manager
14
Years at SVM
25
Industry Experience

Hugh is lead manager of SVM Continental Europe Fund and co manager of SVM All Europe SRI Fund.

Prior to joining SVM, he spent five years with Kempen Capital Management where he was responsible for the management of pan European equities.

Academic Qualifications:
BA Public Administration

Professional Qualifications:

ASIP

Portfolio

Risk Baskets

To help understand the overall balance of the portfolio, stocks are allocated to one of eight risk groups: defensive, cyclical, stable financial, unstable financial, consumer cyclical, oil & gas, mining and finally technology. Most of these groups are self explanatory but financials deserve some clarity. All financials are inherently unstable but in the main, Lloyd’s underwriters and General Insurers take less balance sheet risk, so are relatively more stable than Banks or Life Assurers.

Seeing the portfolio broken down into these categories allows an understanding of how aggressive or defensive the overall portfolio is, and where risk is being taken.

Capgemini4.5
Synthomer4.5
Smurfit Kappa Group4.0
CRH3.2
Alpha FMC3.2
Nestlé4.9
Unilever4.6
Tesco 3.9
Norcros3.2
Jost Werke2.5
Uniphar5.6
DCC4.7
Roche Holdings3.9
AstraZeneca 3.8
Prudential5.2
AXA3.9
Onesavings Bank2.7
Lloyds Banking Group 1.7
Allianz1.6
SDL 3.6
Creo Medical Group2.4
Crayon2.1
Koninklijke Philips2.0
Ericsson1.8

There are no holdings in this category

There are no holdings in this category

There are no holdings in this category

There are no holdings in this category

There are no holdings in this category

Portfolio Structure

As an unconstrained fund we invest in our highest conviction ideas irrespective of market capitalisation, country or sector. As a consequence The SVM All Europe SRI Fund portfolio will vary considerably from the benchmark index and from other funds that are in the same IA sector.

Top 10 Holdings (%)

Uniphar5.6
Prudential5.2
Nestlé4.9
DCC4.7
Unilever4.6
Capgemini4.5
Synthomer4.5
Smurfit Kappa Group4.0
Tesco 3.9
AXA3.9
Rest of Portfolio54.2

Source: SVM, as at 31/08/2020

Sector Exposure (%)

Basic Materials4.5
Industrials29.0
Consumer Goods16.4
Health Care12.1
Consumer Services10.0
Utilities1.1
Financials15.2
Technology12.4

Source: SVM, as at 31/08/2020

Size Analysis (%)

Mega Cap (>€50bn)18.8
Large Cap (<€50bn)28.1
Mid Cap (<€10bn)22.1
Small Cap (<€1bn)31.5

Source: SVM, as at 31/08/2020

Geographic Analysis (%)

UK51.6
France10.4
Switzerland8.7
Germany7.7
Netherlands6.6
Sweden6.0
Ireland5.6
Norway2.1
Belgium1.7

Source: SVM, as at 31/08/2020

Currency Exposure (%)

Euro39.3
Sterling44.3
Norwegian Krone2.1
Swiss Franc8.7
Swedish Krona6.0

Source: SVM, as at 31/08/2020

Show piebar chart

This Month's Featured Stock

CRH

European companies often find themselves well-positioned when it comes to sectors that are seeing increased awareness of ESG issues worldwide, as they have generally had to cope with some of the most stringent levels of global regulation. This can create meaningful competitive advantages, with the construction materials firm CRH a relevant example. By operating to top industry standards in terms of emissions intensities and health and safety, the company is able to lower costs and knows how to generate significant improvements in acquired assets, making it a natural consolidator.

Although cement is inherently carbon intense in its production process, it also offers unique properties that have so far been very difficult to replicate with substitutes at scale. In order to cope with climate change, it is likely that improved cementitious materials will still have to play a large role in future infrastructure projects, until alternative solutions can be found. The main industry body, of which CRH is a member, is supporting innovation into low carbon products, and although CRH’s target of 50% of revenues to come from products with sustainability attributes remains somewhat poorly defined, we believe it signals the right intent. Possibilities such as sequestering carbon dioxide into cement are among the potential game changers.

Through our engagement activities we were encouraged to find an open attitude and willingness to improve, and the company will consider proposals such as incorporating certain industry-critical KPIs more explicitly into variable management remuneration, as well as refining certain environmental targets.

Performance

Performance (%)

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FundIndex
1 month5.12.1
2020 YTD-10.5-6.0
1 year3.1-3.2
3 years-3.52.7
5 years26.944.1
Since launch*206.7114.5
Source: Lipper, as at 31/08/2020, Class B, GBP, UK net tax with net income reinvested and no initial charges. *Fund Launch 31/10/2006.
FundIndexDifference
2020-6.2-3.2-3.0
2019-3.06.0-9.0
20187.34.2+3.1
201729.325.4+3.9
2016-3.45.3-8.7
Source: Lipper, as at 30/06/2020, Class B, GBP, UK net tax with net income reinvested and no initial charges.

Prices

Class A
276.20p
1.81%
Class B
306.80p
1.79%

SVM funds are priced every working day at 12 noon UK time and prices are updated here shortly afterwards.

Source: State Street, as at 25/09/2020.

Commentary

Global equities continued to make new highs led by the relentless upwards march of technology stocks. Abundant liquidity, policy stimulus, and a weakening US dollar have created the fertile conditions necessary for speculative excess. Outside of the technology sector returns were more muted and the bifurcation in returns between the perceived Covid winners and losers remains extreme. The fund returned +5.1% versus the FTSE Europe that returned +2.1%.

The disease outlook remains the key variable for both economies and markets. Economic data in both Europe and the UK remains mixed. Certain segments such as retail sales and housing transactions have recovered strongly while business investment and employment remain depressed. September and October are key months for many businesses, particularly those exposed to business investment, and will provide a gauge of the strength and sustainability of the recovery. Should a vaccine prove effective there is the tantalising prospect of synchronised global recovery sometime in 2021. If this materialises then the current narrow equity market leadership will broaden out significantly.

The Brexit negotiations continue to make little progress. Both sides have adopted the familiar negotiating tactic of promising compromise while labelling the other side as being unrealistic and uncooperative. Breakthroughs in EU negotiations tend to only occur at the eleventh hour and the current impasse is therefore unsurprising, but the clock is ticking.

The fund’s technology holdings performed strongly. SDL, a provider of translation software and services, rose as the group announced that it was being acquired by RWS at a significant premium in an all paper deal. Earlier in the month the group’s interim results had demonstrated its financial and operational resilience. Over the last few years the current management team have made numerous improvements to the business which had left it well placed to grow both organically and inorganically. Crayon, the Nordic provider of software management and services, gained as it delivered its best ever quarterly result. The company is firmly in the category of Covid winners as corporates look to make their IT spend more efficient. The adoption of cloud computing and the use of public cloud services such as Amazon Web Services and Microsoft’s Azure has been particularly beneficial. Crayon has a very strong relationship with Microsoft and has recently signed a strategic partnership agreement with Amazon Web Services. Interim results from Va-Q-Tec, a provider of vacuum storage solutions, delivered another quarter of double-digit revenue growth and the shares responded accordingly. One Savings Bank rebounded as interim results showed that the business was continuing to grow and that the balance sheet was robust despite higher provisioning. Associated British Foods rose as UK retail sales came in ahead of expectations.

TI Fluid declined as investors fretted over the outlook for the global automotive space. We believe that current sentiment is overly negative but recognise it will take some time for this to reverse. Philips fell as healthcare stocks underperformed. Norcros declined for no discernible reason.

Trading activity was limited. The fund continued to take profits in Lime Technologies.

Commentary by
Neil Veitch
Global & UK Investment Director
Hugh Cuthbert
European Investment Manager
As at 31/08/2020.

Global equities continued to make new highs led by the relentless upwards march of technology stocks. Abundant liquidity, policy stimulus, and a weakening US dollar have created the fertile conditions necessary for speculative excess. Outside of the technology sector returns were more muted and the bifurcation in returns between the perceived Covid winners and losers remains extreme. The fund returned +5.1% versus the FTSE Europe that returned +2.1%.

The disease outlook remains the key variable for both economies and markets. Economic data in both Europe and the UK remains mixed. Certain segments such as retail sales and housing transactions have recovered strongly while business investment and employment remain depressed. September and October are key months for many businesses, particularly those exposed to business investment, and will provide a gauge of the strength and sustainability of the recovery. Should a vaccine prove effective there is the tantalising prospect of synchronised global recovery sometime in 2021. If this materialises then the current narrow equity market leadership will broaden out significantly.

The Brexit negotiations continue to make little progress. Both sides have adopted the familiar negotiating tactic of promising compromise while labelling the other side as being unrealistic and uncooperative. Breakthroughs in EU negotiations tend to only occur at the eleventh hour and the current impasse is therefore unsurprising, but the clock is ticking.

The fund’s technology holdings performed strongly. SDL, a provider of translation software and services, rose as the group announced that it was being acquired by RWS at a significant premium in an all paper deal. Earlier in the month the group’s interim results had demonstrated its financial and operational resilience. Over the last few years the current management team have made numerous improvements to the business which had left it well placed to grow both organically and inorganically. Crayon, the Nordic provider of software management and services, gained as it delivered its best ever quarterly result. The company is firmly in the category of Covid winners as corporates look to make their IT spend more efficient. The adoption of cloud computing and the use of public cloud services such as Amazon Web Services and Microsoft’s Azure has been particularly beneficial. Crayon has a very strong relationship with Microsoft and has recently signed a strategic partnership agreement with Amazon Web Services. Interim results from Va-Q-Tec, a provider of vacuum storage solutions, delivered another quarter of double-digit revenue growth and the shares responded accordingly. One Savings Bank rebounded as interim results showed that the business was continuing to grow and that the balance sheet was robust despite higher provisioning. Associated British Foods rose as UK retail sales came in ahead of expectations.

TI Fluid declined as investors fretted over the outlook for the global automotive space. We believe that current sentiment is overly negative but recognise it will take some time for this to reverse. Philips fell as healthcare stocks underperformed. Norcros declined for no discernible reason.

Trading activity was limited. The fund continued to take profits in Lime Technologies.

Independent thinking

Monthly analysis and insights from our fund managers

Literature

Latest fact sheet

Availability

The fund is a sub-fund within the SVM ICVC Fund, a UK domiciled Open Ended Investment Company, with UCITS status. The Funds are regulated by the UK Financial Conduct Authority.

Dealing into the fund is available daily. Deals are accepted on a forward pricing basis, with 24 hours notice. SVM employs International Financial Data Services (IFDS Group) as third party administrator and transfer agent to our funds.

How to Invest
You can invest directly with us or through a wide variety of third party wraps, supermarkets and life companies.

For each fund in the SVM ICVC range we offer a B share class which is our lowest priced clean share class.

Share class availability via third parties varies depending on their model.

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Professional Adviser Helpline
0800 0199 110

Literature Requests
0800 0199 440

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