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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
Fund Size£20.2m

Data as at 31/12/2021.

Fund Managers

Neil Veitch
Global & UK Investment Director
15
Years at SVM
25
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
27
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 FMC7.9
Smurfit Kappa Group5.9
Synthomer5.2
CRH4.5
Rexel4.2
AXA4.9
OSB Group4.8
Lloyds Banking Group 4.4
Prudential4.3
Jackson Financial0.3
Uniphar5.0
DCC3.0
Smith & Nephew2.2
Sedana Medical1.6
Apontis Pharma0.8
Norcros6.8
Tesco 2.9
Jost Werke2.4
Creo Medical Group3.4
LungLife AI2.0
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 (%)

Alpha FMC7.9
Norcros6.8
Smurfit Kappa Group5.9
Synthomer5.2
Uniphar5.0
AXA4.9
OSB Group4.8
CRH4.5
Lloyds Banking Group 4.4
Prudential4.3
Rest of Portfolio46.4

Source: SVM, as at 31/12/2021

Sector Exposure (%)

Industrials29.1
Financials18.8
Materials18.7
Health Care15.0
Information Technology5.0
Consumer Discretionary3.0
Consumer Staples2.9

Source: SVM, as at 31/12/2021

Size Analysis (%)

Mega Cap (>€50bn)4.9
Large Cap (<€50bn)28.2
Mid Cap (<€10bn)28.3
Small Cap (<€1bn)31.1

Source: SVM, as at 31/12/2021

Geographic Analysis (%)

UK59.3
Ireland15.3
France13.1
Germany3.2
Sweden1.6

Source: SVM, as at 31/12/2021

Currency Exposure (%)

Euro31.6
Sterling59.0
Swedish Krona1.6
Other0.3

Source: SVM, as at 31/12/2021

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This Month's Featured Stock

Apontis Pharma

Apontis Pharma’s innovative single pill not only saves lives but also helps alleviate the cost pressures on stretched healthcare budgets.

By combining commonly co-prescribed generic drugs into a single pill, the Apontis product helps patients stick to their dosing regimen.  These regimes commonly consist of multiple doses which, particularly for elderly users, can result in non-compliance.

A recent study of the concept for cardiology patients highlighted the 49% reduction in mortality risk as a result of incorporating this innovative product into treatment plans. While this statistic alone justifies the use of the single pill, the study also noted the 34% reduction in overall cost to payors as users avoided the need for costly hospital stays and further treatments. This has led the European Society of Cardiology to update its guidelines recommending single pill usage as well as insurers, such as Axa promising to provide reimbursement.

Apontis can apply this principle to a host of indications where multiple dosing regimes are recommended so the growth prospects for the company are extremely good. In addition, the company is currently confined to its domestic market, Germany, but this is likely to change in the foreseeable future as the balance sheet is strong. Due to the proceeds of the IPO, geographical expansion has become a strategic imperative.

In the meantime, we are pushing management for more ESG disclosure in company literature which currently is sorely lacking. This is put down to the recent listing of the company and improvements are promised for the coming year’s annual report.

Performance

Performance (%)

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FundIndex
1 month6.24.1
2021 YTD26.218.1
1 year26.218.1
3 years59.845.2
5 years58.952.3
Since launch*339.9176.6
Source: Lipper, as at 31/12/2021, Class B, GBP, UK net tax with net income reinvested and no initial charges. *Fund Launch 31/10/2006.
FundIndexDifference
202126.218.1+8.1
20201.82.7-0.9
201924.519.8+4.7
2018-16.6-9.0-7.6
201719.115.3+3.8
Source: Lipper, as at 31/12/2021, Class B, GBP, UK net tax with net income reinvested and no initial charges.

Prices

Class A
389.50p
-0.13%
Class B
437.00p
-0.14%

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

Source: State Street, as at 14/01/2022.

Commentary

Financial markets have spent the last eighteen months looking over their shoulder for new and potentially more dangerous Covid variants. The arrival of the more transmissible Omicron in late November initially looked like it may herald what many had feared. Governments responded by putting in place restrictions and activity sagged. Yet despite soaring infection rates and a pick-up in hospitalisations, deaths have remained low. Investors interpreted this as the ‘market clearing event’ that facilitates the transition to a more normalised environment. Equity markets rebounded and made new all-time highs. The fund returned 6.2% versus the MSCI Europe Index that returned 4.1%

The minutes of the December Federal Reserve Board showed participants believed that higher inflation and a tight labour market could necessitate lifting short-term rates “sooner or at a faster pace than participants had earlier anticipated.” Officials also now expect to end the expansion of the Fed’s balance sheet in March. The practical impact of these moves is limited but the ‘signalling’ effect is more significant and has driven a sharp rotation out of ‘growth’ stocks into ‘value’. Despite the initial intra market volatility, monetary conditions are not about to dramatically tighten. Investors will, however, need to navigate the transition from a liquidity driven bull market to one driven by earnings. Volatility has increased and the recent sector rotation will likely continue. But with a strong underlying global economy and significantly negative real interest rates the equity bull market is intact. The fund adopts a ‘value’ approach to investing and the ongoing rotation away from ‘growth’ has been beneficial. In line with this approach the fund has significant exposure to the UK market which trades at a material discount to other developed equity markets.

The emerging consensus that Omicron, while more transmissible, is considerably less virulent positively impacted numerous sectors. Increased confidence in the economic outlook drove a recovery in cyclical stocks, benefitting Smurfit Kappa and Rexel. Travel related stocks rebounded strongly as confidence grew that the worst of any Covid disruption was behind us. Alpha Financial Consulting sustained its outperformance post its very well received interims. Uniphar gained as it announced three small acquisitions that led to analysts nudging up their profit forecasts. Despite the very strong performance from both stocks over the last twelve months further upside remains. One Savings Bank and Axa outperformed as financials benefitted from a steepening in the yield curve.

Synthomer was the largest detractor from performance. The shares slumped as brokers raised concerns over the outlook for the synthetic rubber glove market. We believe a more regular market is already factored into market expectations but unfortunately this will only become apparent with time. Even if conditions prove to be weaker than anticipated, the company is more diversified than it has been in the past and the valuation attractive. A number of smaller holdings drifted on little news flow.

There was limited trading activity.

Commentary by
Neil Veitch
Global & UK Investment Director
Hugh Cuthbert
European Investment Manager
As at 31/12/2021.

Financial markets have spent the last eighteen months looking over their shoulder for new and potentially more dangerous Covid variants. The arrival of the more transmissible Omicron in late November initially looked like it may herald what many had feared. Governments responded by putting in place restrictions and activity sagged. Yet despite soaring infection rates and a pick-up in hospitalisations, deaths have remained low. Investors interpreted this as the ‘market clearing event’ that facilitates the transition to a more normalised environment. Equity markets rebounded and made new all-time highs. The fund returned 6.2% versus the MSCI Europe Index that returned 4.1%

The minutes of the December Federal Reserve Board showed participants believed that higher inflation and a tight labour market could necessitate lifting short-term rates “sooner or at a faster pace than participants had earlier anticipated.” Officials also now expect to end the expansion of the Fed’s balance sheet in March. The practical impact of these moves is limited but the ‘signalling’ effect is more significant and has driven a sharp rotation out of ‘growth’ stocks into ‘value’. Despite the initial intra market volatility, monetary conditions are not about to dramatically tighten. Investors will, however, need to navigate the transition from a liquidity driven bull market to one driven by earnings. Volatility has increased and the recent sector rotation will likely continue. But with a strong underlying global economy and significantly negative real interest rates the equity bull market is intact. The fund adopts a ‘value’ approach to investing and the ongoing rotation away from ‘growth’ has been beneficial. In line with this approach the fund has significant exposure to the UK market which trades at a material discount to other developed equity markets.

The emerging consensus that Omicron, while more transmissible, is considerably less virulent positively impacted numerous sectors. Increased confidence in the economic outlook drove a recovery in cyclical stocks, benefitting Smurfit Kappa and Rexel. Travel related stocks rebounded strongly as confidence grew that the worst of any Covid disruption was behind us. Alpha Financial Consulting sustained its outperformance post its very well received interims. Uniphar gained as it announced three small acquisitions that led to analysts nudging up their profit forecasts. Despite the very strong performance from both stocks over the last twelve months further upside remains. One Savings Bank and Axa outperformed as financials benefitted from a steepening in the yield curve.

Synthomer was the largest detractor from performance. The shares slumped as brokers raised concerns over the outlook for the synthetic rubber glove market. We believe a more regular market is already factored into market expectations but unfortunately this will only become apparent with time. Even if conditions prove to be weaker than anticipated, the company is more diversified than it has been in the past and the valuation attractive. A number of smaller holdings drifted on little news flow.

There was limited trading activity.

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

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