Menu

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
Fund Size£21.3m

Data as at 31/05/2021.

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.

Alpha FMC5.9
Synthomer5.7
Smurfit Kappa Group5.1
Rexel4.0
CRH4.0
Prudential4.9
Lloyds Banking Group 4.4
AXA4.1
OSB Group3.9
Allianz3.5
Norcros6.6
Jost Werke3.5
Tesco 2.1
Nordic Entertainment Group1.8
Vistry Group1.6
Uniphar6.2
DCC2.8
Roche Holdings2.3
Creo Medical Group3.4
Koninklijke Philips2.1
ActiveOps1.2

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 (%)

Norcros6.6
Uniphar6.2
Alpha FMC5.9
Synthomer5.7
Smurfit Kappa Group5.1
Prudential4.9
Lloyds Banking Group 4.4
AXA4.1
Rexel4.0
CRH4.0
Rest of Portfolio49.1

Source: SVM, as at 31/05/2021

Sector Exposure (%)

Industrials27.2
Financials20.8
Materials20.6
Health Care14.0
Consumer Discretionary5.0
Information Technology4.0
Consumer Staples2.1
Communication Services1.8

Source: SVM, as at 31/05/2021

Size Analysis (%)

Mega Cap (>€50bn)5.8
Large Cap (<€50bn)24.3
Mid Cap (<€10bn)38.7
Small Cap (<€1bn)26.5

Source: SVM, as at 31/05/2021

Geographic Analysis (%)

UK58.1
Ireland11.3
France11.0
Germany8.8
Switzerland2.3
Netherlands2.1
Sweden1.8

Source: SVM, as at 31/05/2021

Currency Exposure (%)

Euro37.2
Sterling54.1
Swiss Franc2.3
Swedish Krona1.8

Source: SVM, as at 31/05/2021

Show piebar chart

This Month's Featured Stock

Tesco

UK retailer Tesco’s annual report and accounts were more interesting than usual this year as they contained the company’s inaugural TCFD (Task Force on Climate-related Financial Disclosure) report which shed an insight into the impact climate change may have on the company’s operations over the coming years. Such reports, if properly compiled, also give an indication of the financial cost of these impacts which in turn allows us to assess the significance of environmental issues when considering the appropriate valuations for the companies concerned. In Tesco’s case, while still far from a comprehensive assessment, some material conclusions can be drawn.

The initial assessment focussed on animal protein production and the company’s real estate portfolio. A 2 and 4-degree scenario were applied with the former assuming the world rises to the challenge of climate change and limits global warming to 2 degrees while in the latter there is a systemic failure to address the issue. A ten year time frame was set to 2030.

In the worst case scenario a £300m hit to Tesco’s 2030 earnings is envisaged which, to put into context, is 16.5% of the company’s 2020 operating profit. There are a number of caveats to be placed on this analysis, not least the fact that 2030 lies well beyond the scope of our financial forecasts, but what this does do is provide the basis for more detailed discussions with Tesco over how they will combat this threat. The TCFD report stresses that any outcomes are before potential mitigating actions and it is these mitigating actions which we will focus on in our engagement with the company.

Performance

Performance (%)

{{#if periods.length }}
{{/if }}
{{#each series }}
{{ displayName }}
{{ endValue }}
{{/each }}
FundIndex
1 month3.61.6
2021 YTD21.29.4
1 year48.424.6
3 years28.923.0
5 years69.567.0
Since launch*322.6156.4
Source: Lipper, as at 31/05/2021, Class B, GBP, UK net tax with net income reinvested and no initial charges. *Fund Launch 31/10/2006.
FundIndexDifference
202158.930.9+28.0
2020-17.8-10.6-7.2
2019-4.74.3-9.0
20189.62.6+7.0
201717.627.0-9.4
Source: Lipper, as at 31/03/2021, Class B, GBP, UK net tax with net income reinvested and no initial charges.

Prices

Class A
382.20p
0.32%
Class B
427.00p
0.33%

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

Source: State Street, as at 14/06/2021.

Commentary

Equity markets edged higher over the month. Growth stocks generally underperformed with the technology-heavy NASDAQ index posting a negative return. Investors remain focused on the threats of a vaccine-evading variant and the potential for tighter monetary policy to short-circuit the equity bull market. Both threats receded slightly during the month with vaccinations accelerating and bond yields stabilising. The fund returned 3.6% versus 1.6% for the MSCI Europe.

The Bank of England became the second major central bank to announce it was going to slow the pace of its asset purchase program. Bank officials were at pains to emphasise that the targeted stock of purchased assets would remain the same and the stance of monetary policy was unaffected. Whether this constitutes tapering, or not, is a question of semantics. Either way, the decision represents the first stage in an eventual tightening of policy. In response, GBP rallied against both USD and the Euro. The ECB meanwhile has recently accelerated its rate of bond buying under its Pandemic Emergency Purchase Programme (PEPP). With the economy rapidly improving as the number of vaccinations steps up, it will likely come under pressure from the ‘hawks’ to slow purchases. Indeed, it could be argued that the ECB has been undertaking a closet form of yield curve control under the guise of the PEPP.

As economies recover, central banks face a delicate balancing act as they withdraw stimulus. The paradox of QE is that the more successful policymakers have been in encouraging investors to purchase riskier assets, the more difficult it is to ‘normalise’ policy without a significant dislocation in markets. As Gertjan Vlieghe, an external member of the Bank of England’s Monetary Policy Committee noted, ‘What will ultimately tell us to what extent inflation pressures need a monetary policy response is the passage of time.’ Despite ongoing tension between markets and policy we feel this is more likely to be a 2022 issue for equity investors.

Alpha Financial Consulting rose as the company announced the acquisition of Lionpoint, a specialist consultant focused on the ‘alternatives’ marketplace. The deal extends AFM’s presence in the US market and elsewhere. Not only is Lionpoint a strong cultural fit, but it was acquired at an attractive multiple and offers significant revenue synergies. Despite the share’s strong recent performance, we think considerable upside remains. Lloyds gained as analysts revised their profit forecasts higher in response to the group’s positive 1Q21 update. The bank continues to benefit from the UK’s economic recovery with net interest margins resilient and a decline in loan loss provisions. Irish medical distributor, Uniphar, climbed as investors sought exposure to attractively valued growth stocks. The shares were also buoyed by takeover activity in the sector.

Menzies, a provider of aviation services, declined as the company announced a small placing to facilitate growth. In a trading update which accompanied the placing, current trading was revealed as being ahead of expectations with commercial momentum strong. Menzies, to put it mildly, has been a frustrating stock. We finally sense, however, that the business has reached an inflection point and is well placed to benefit from the uptick in air travel as pandemic restrictions ease.

Trading activity was limited.

Commentary by
Neil Veitch
Global & UK Investment Director
Hugh Cuthbert
European Investment Manager
As at 31/05/2021.

Equity markets edged higher over the month. Growth stocks generally underperformed with the technology-heavy NASDAQ index posting a negative return. Investors remain focused on the threats of a vaccine-evading variant and the potential for tighter monetary policy to short-circuit the equity bull market. Both threats receded slightly during the month with vaccinations accelerating and bond yields stabilising. The fund returned 3.6% versus 1.6% for the MSCI Europe.

The Bank of England became the second major central bank to announce it was going to slow the pace of its asset purchase program. Bank officials were at pains to emphasise that the targeted stock of purchased assets would remain the same and the stance of monetary policy was unaffected. Whether this constitutes tapering, or not, is a question of semantics. Either way, the decision represents the first stage in an eventual tightening of policy. In response, GBP rallied against both USD and the Euro. The ECB meanwhile has recently accelerated its rate of bond buying under its Pandemic Emergency Purchase Programme (PEPP). With the economy rapidly improving as the number of vaccinations steps up, it will likely come under pressure from the ‘hawks’ to slow purchases. Indeed, it could be argued that the ECB has been undertaking a closet form of yield curve control under the guise of the PEPP.

As economies recover, central banks face a delicate balancing act as they withdraw stimulus. The paradox of QE is that the more successful policymakers have been in encouraging investors to purchase riskier assets, the more difficult it is to ‘normalise’ policy without a significant dislocation in markets. As Gertjan Vlieghe, an external member of the Bank of England’s Monetary Policy Committee noted, ‘What will ultimately tell us to what extent inflation pressures need a monetary policy response is the passage of time.’ Despite ongoing tension between markets and policy we feel this is more likely to be a 2022 issue for equity investors.

Alpha Financial Consulting rose as the company announced the acquisition of Lionpoint, a specialist consultant focused on the ‘alternatives’ marketplace. The deal extends AFM’s presence in the US market and elsewhere. Not only is Lionpoint a strong cultural fit, but it was acquired at an attractive multiple and offers significant revenue synergies. Despite the share’s strong recent performance, we think considerable upside remains. Lloyds gained as analysts revised their profit forecasts higher in response to the group’s positive 1Q21 update. The bank continues to benefit from the UK’s economic recovery with net interest margins resilient and a decline in loan loss provisions. Irish medical distributor, Uniphar, climbed as investors sought exposure to attractively valued growth stocks. The shares were also buoyed by takeover activity in the sector.

Menzies, a provider of aviation services, declined as the company announced a small placing to facilitate growth. In a trading update which accompanied the placing, current trading was revealed as being ahead of expectations with commercial momentum strong. Menzies, to put it mildly, has been a frustrating stock. We finally sense, however, that the business has reached an inflection point and is well placed to benefit from the uptick in air travel as pandemic restrictions ease.

Trading activity was limited.

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.

Dealing - Funds
0345 066 1110

Professional Adviser Helpline
0800 0199 110

Literature Requests
0800 0199 440

None
None
None
None
None
None
None
None
None
None
None
Nexus logo
None
None
None

Contact our sales team

With markets dominated by news flow it is important to keep abreast of the influences that are guiding our investment decisions.

Get in touch

The Value Key

The Value Key blog allows our active fund managers and analysts to share their views on a range of topics.

Read the blog