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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 objective of the Fund is to achieve capital growth over the long term (5 years or more) and it aims to outperform the MSCI Europe Index. It adopts a positive engagement approach toward investment and enters into meaningful dialogue with companies regarding environmental, social and corporate governance issues. The Fund will invest at least 80% in equities and equity related instruments which are dealt in or traded on all European Eligible Securities Markets. The Fund may invest in 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
BenchmarkMSCI Europe Index
IA SectorEurope inc UK
Type of SharesAccumulation
XD Date31 December
Pay Date30 April

Data as at 30/09/2021.

Fund Managers

Neil Veitch
Global & UK Investment Director
15
Years at SVM
24
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
15
Years at SVM
26
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.

Synthomer6.0
Smurfit Kappa Group5.9
Alpha FMC5.9
Rexel4.9
Forterra4.4
Prudential5.1
AXA4.5
OSB Group4.4
Lloyds Banking Group 4.0
Allianz1.7
Norcros6.4
Jost Werke3.6
Nordic Entertainment Group3.5
Tesco 2.5
Uniphar7.3
DCC3.0
Smith & Nephew1.4
Apontis Pharma0.9
Creo Medical Group3.0
LungLife AI2.1
ActiveOps1.0

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

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 (%)

Uniphar7.3
Norcros6.4
Synthomer6.0
Smurfit Kappa Group5.9
Alpha FMC5.9
Prudential5.1
Rexel4.9
AXA4.5
Forterra4.4
OSB Group4.4
Rest of Portfolio45.2

Source: SVM, as at 31/08/2021

Sector Exposure (%)

Industrials28.6
Materials20.7
Financials19.6
Health Care14.7
Information Technology4.6
Consumer Discretionary3.5
Communication Services3.5
Consumer Staples2.5

Source: SVM, as at 31/08/2021

Size Analysis (%)

Mega Cap (>€50bn)6.2
Large Cap (<€50bn)26.8
Mid Cap (<€10bn)35.4
Small Cap (<€1bn)29.4

Source: SVM, as at 31/08/2021

Geographic Analysis (%)

UK61.8
Ireland13.3
France13.0
Germany6.2
Sweden3.5

Source: SVM, as at 31/08/2021

Currency Exposure (%)

Euro36.8
Sterling57.5
Swedish Krona3.5

Source: SVM, as at 31/08/2021

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This Month's Featured Stock

Lloyds Bank

We have seen considerable improvements from Lloyds Bank in terms of ESG strategy and reporting in recent years. There are now targets in place for a host of non-financial metrics, not least on the bank’s environmental performance. Hence, we see a net Zero ambition for 2050 as well as shorter term targets such as business travel emissions remaining 50% below pre-covid levels and a 50% reduction in electricity consumption by 2030 accompanied by a pledge to utilise 100% renewable energy.

While commendable, such initiatives are relatively insignificant when compared to the steps Lloyds are taking regarding the emissions which occur from their loan book. Here the company give a useful breakdown to highlight the scope of this issue. As of 2018, which is the baseline for the company’s subsequent target, the bank’s lending book was responsible for 5.6% of the UK’s total emissions on a sectoral basis. Clearly any measures taken here have the potential to meaningfully impact the UK’s commitment to the Paris Agreement.

And Lloyds have done just that by committing to reduce the carbon emissions they finance by more than 50% by 2030.

We are of course not taking such a pledge at face value and will continue to engage with the company regarding the detail of the plan. Of particular interest to us is the actions the bank will take should they find themselves not on target and will they turn away business should this be the case. This is important not only from an environmental progress perspective but also for our forecasts for the bank’s financial prospects.

Performance

Performance (%)

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FundIndex
1 month3.12.6
2021 YTD26.515.3
1 year43.826.3
3 years33.326.8
5 years69.858.5
Since launch*340.9170.2
Source: Lipper, as at 31/08/2021, Class B, GBP, UK net tax with net income reinvested and no initial charges. *Fund Launch 31/10/2006.
FundIndexDifference
202141.121.5+19.6
2020-6.2-3.5-2.7
2019-3.06.4-9.4
20187.34.2+3.1
201729.325.4+3.9
Source: Lipper, as at 30/06/2021, Class B, GBP, UK net tax with net income reinvested and no initial charges.

Prices

Class A
379.20p
0.48%
Class B
424.70p
0.50%

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

Source: State Street, as at 15/10/2021.

Commentary

St Ledger’s Day is rapidly approaching. And according to the old city adage investors should have returned from their summer break in a positive mood. Yet Covid continues to dominate the headlines and even with the success of the vaccination campaign infections are rising, supply chains are faltering, and economic momentum is slowing. But despite the recent deceleration the underlying economy is strong. Consumer and corporate balance sheets are robust and there is considerable pent-up demand. The reflation trade has paused but is not over. The fund returned 3.1% versus 2.6% for the MSCI Europe Index.

In a much anticipated speech to the Jackson hole gathering of central bankers, the chair of the Federal Reserve sent a strong hint that the Fed will begin tapering this year. The psychological impact of the move will be considerably greater than its mechanistic impact. Investors should focus on the positive signal that tapering sends; the economy is healing and stimulus can begin to be withdrawn. Tapering may lead to a short term increase in volatility but it will not derail the bull market. Equity markets function as a discounting mechanism and will not correct until collectively investors believe the end of the economic cycle is in sight. Many things can change the collective mindset, often with little warning, but for the moment the path of least resistant is higher.

The fund’s largest holding Uniphar gained ahead of its interim results. The shares have performed exceptionally well due to strong growth in revenues and profits. Despite making acquisitions leverage is low and management are open to pursuing larger transactions as it seeks to develop global platforms for its Commercial & Clinical and Product Access businesses. Both divisions have grown substantially and look to have significant scope to grow. Two of last month’s outperformers, Nordic Entertainment and Volution, continued their recent outperformance. Prudential Plc gained as it released well received interim results. Numbers were strong across the board with new business sales growing 21%. Post the demerger of Jackson National later this month the group will be an Asian focused insurer trading at a significant discount to its nearest peers. Another insurer, Axa, performed well. The company’s 2Q21 results were positive and arguably the strongest for a considerable time. Earnings were more than 10% ahead of expectations but it was the breadth of the beat that stood out. Under CEO Thomas Brubert, AXA has streamlined its business, exiting or disposing of those most exposed to volatile financial markets and redeploying capital into underwriting. This improvement has yet to be fully reflected in the share price.

Creo Medical declined as it announced an equity raise to fund expansion. The early stage of the company’s product suite makes it almost impossible to value the business accurately. However, it offers a range of products with strong IP backing that can dramatically improve patient outcomes and reduce costs. Its MicroBlate tissue ablation device has recently been used to treat patients with unresectable pancreatic tumours with very encouraging results.

A new position was initiated in Smith & Nephew.

Commentary by
Neil Veitch
Global & UK Investment Director
Hugh Cuthbert
European Investment Manager
As at 31/08/2021.

St Ledger’s Day is rapidly approaching. And according to the old city adage investors should have returned from their summer break in a positive mood. Yet Covid continues to dominate the headlines and even with the success of the vaccination campaign infections are rising, supply chains are faltering, and economic momentum is slowing. But despite the recent deceleration the underlying economy is strong. Consumer and corporate balance sheets are robust and there is considerable pent-up demand. The reflation trade has paused but is not over. The fund returned 3.1% versus 2.6% for the MSCI Europe Index.

In a much anticipated speech to the Jackson hole gathering of central bankers, the chair of the Federal Reserve sent a strong hint that the Fed will begin tapering this year. The psychological impact of the move will be considerably greater than its mechanistic impact. Investors should focus on the positive signal that tapering sends; the economy is healing and stimulus can begin to be withdrawn. Tapering may lead to a short term increase in volatility but it will not derail the bull market. Equity markets function as a discounting mechanism and will not correct until collectively investors believe the end of the economic cycle is in sight. Many things can change the collective mindset, often with little warning, but for the moment the path of least resistant is higher.

The fund’s largest holding Uniphar gained ahead of its interim results. The shares have performed exceptionally well due to strong growth in revenues and profits. Despite making acquisitions leverage is low and management are open to pursuing larger transactions as it seeks to develop global platforms for its Commercial & Clinical and Product Access businesses. Both divisions have grown substantially and look to have significant scope to grow. Two of last month’s outperformers, Nordic Entertainment and Volution, continued their recent outperformance. Prudential Plc gained as it released well received interim results. Numbers were strong across the board with new business sales growing 21%. Post the demerger of Jackson National later this month the group will be an Asian focused insurer trading at a significant discount to its nearest peers. Another insurer, Axa, performed well. The company’s 2Q21 results were positive and arguably the strongest for a considerable time. Earnings were more than 10% ahead of expectations but it was the breadth of the beat that stood out. Under CEO Thomas Brubert, AXA has streamlined its business, exiting or disposing of those most exposed to volatile financial markets and redeploying capital into underwriting. This improvement has yet to be fully reflected in the share price.

Creo Medical declined as it announced an equity raise to fund expansion. The early stage of the company’s product suite makes it almost impossible to value the business accurately. However, it offers a range of products with strong IP backing that can dramatically improve patient outcomes and reduce costs. Its MicroBlate tissue ablation device has recently been used to treat patients with unresectable pancreatic tumours with very encouraging results.

A new position was initiated in Smith & Nephew.

Independent thinking

Monthly analysis and insights from our fund managers

Literature

Latest fact sheet

If you would like a copy of any historic factsheets please email info@svmonline.co.uk

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 SS&C Financial Services International Limited and SS&C Financial Services Europe Limited 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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