Menu

SVM UK Opportunities Fund

SVM UK Opportunities Fund

Fresh thinking never goes out of style

The Fund, led by Neil Veitch, looks to achieve positive returns by identifying and investing in organisations with sound business models where he believes the current market valuation offers an opportunity. The Fund can invest in businesses of any size.

SVM UK Opportunities Fund

Fresh thinking never goes out of style

The Fund, led by Neil Veitch, looks to achieve positive returns by identifying and investing in organisations with sound business models where he believes the current market valuation offers an opportunity. The Fund can invest in businesses of any size.

Overview

Fund Objective

The Fund's aim is to achieve medium to long-term capital growth by investing principally in UK Companies listed on the London Stock Exchange and other permitted securities.

Approach

We believe the basis of successful investing is simple. We aim to find good businesses that we can buy at an attractive price.

But it’s important how we define and identify those characteristics in detail. We don’t see value and growth as two different measures or types of investment; and we don’t measure them on the basis of current earnings and share prices.

Rather than value or growth, we invest on the basis of the value of growth. We want to find strong companies for your portfolio whose future growth is not reflected in current market expectations. We believe these companies have an attractive positive bias in their risk-reward profile which makes them potentially rewarding investments in your portfolio.

Investing in this fund, you will be buying a concentrated portfolio of companies of any size with strong, undervalued long-term prospects. You can invest with confidence in our ability to find these companies, based on our long history of comprehensive UK company analysis and financial modelling, and our understanding of what’s changing in companies and their industries.

Fund Details

Launch Date20 March 2000
BenchmarkFTSE All-Share Index
IA SectorUK All Companies
Type of SharesAccumulation
XD Date31 December
Pay Date30 April
Fund Size£122.3m

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

Craig Jeruzal
UK Investment Analyst
14
Years at SVM
15
Industry Experience

Craig joined SVM in 2006 and is responsible for SVM's SRI and Corporate Governance analysis. Craig also assists the portfolio managers in equity research.

Academic Qualifications:
MA (Hons) Politics

Professional Qualifications:

CFA

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.

Synthomer3.9
CRH3.7
Smurfit Kappa Group3.5
Balfour Beatty2.8
Serco Group2.6
DCC4.8
Unilever3.7
National Grid 3.5
GlaxoSmithKline3.3
Roche Holdings3.2
Tesco 5.1
GVC Holdings 4.0
Ryanair 3.6
Norcros3.3
William Hill2.9
SDL 4.6
Micron Technology3.0
Creo Medical Group2.6
Team172.1
Koninklijke Philips1.5
Prudential4.9
RSA Insurance Group2.2
Onesavings Bank2.0
Legal & General1.6
M&G1.3
Jadestone Energy5.1
Pantheon Resources1.8
Energean1.8
BP1.4
Jersey Oil & Gas0.6

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 or sector. As a consequence the SVM UK Opportunities Fund portfolio will vary considerably from the benchmark index and from other funds that are in the same IA sector.

Top 10 Holdings (%)

Jadestone Energy5.1
Tesco 5.1
Prudential4.9
DCC4.8
SDL 4.6
GVC Holdings 4.0
Synthomer3.9
CRH3.7
Unilever3.7
Ryanair 3.6
Rest of Portfolio56.8

Source: SVM, as at 31/08/2020

Sector Exposure (%)

Oil & Gas12.1
Basic Materials3.9
Industrials28.0
Consumer Goods8.1
Health Care13.2
Consumer Services14.3
Utilities4.4
Financials15.1
Technology7.6

Source: SVM, as at 31/08/2020

Size Analysis (%)

Large Cap50.6
Med/Mid 25023.1
Small/Small Cap26.3

Source: SVM, as at 31/08/2020

Show piebar chart

This Month's Featured Stock

SDL

SDL is a provider of translation and content management services and software. The company serves over 4,500 enterprise customers around the world, helping them create and maintain multilingual content.

During the month, SDL was the subject of an all-paper bid from RWS, a UK-listed translation services provider. SDL shareholders have been offered 1.22 RWS shares in exchange for each SDL share held. At month-end this valued each SDL share at 741p, a 25% premium to the level the shares were trading at prior to the announcement. RWS specialises in high-end translation, with a focus on the life sciences, technology, and IP services markets. Historically, it has grown revenues faster and delivered higher operating profit margins than SDL and traded at a significant valuation premium. Some have been surprised, therefore, that they would ‘dilute’ the quality of their business by taking over SDL.

In our view, this backwards-looking analysis misses many key points. Under its current management team, SDL has accelerated its technology investment and has, we believe, reached an inflection point in its growth profile. Helix, SDL’s in-house, cloud-based workflow management system has helped the group improve translator productivity and project management. Over three-quarters of SDL’s addressable customers now have almost all their volume managed through the Helix platform. SDL have also launched new customer-facing translation tools in recent months. ‘SLATE’ is perhaps the most exciting, offering an online translation on demand platform. This has the potential to open a whole new market for SDL, allowing smaller enterprises easy access to high-quality machine translation with the option of paying more on an ad-hoc basis for expert human assistance. By contrast, RWS has no comparable technology platform or machine translation technology.

Acquiring SDL is a sensible move for RWS. The combined business will be the global leader in translation services. While SDL were only beginning to reap the benefits of their technology investment, being able to process greater volumes of work through the Helix platform will bring productivity improvements and cost benefits.

Performance

Performance (%)

{{#if periods.length }}
{{/if }}
{{#each series }}
{{ displayName }}
{{ endValue }}
{{/each }}
FundIndex
1 month4.52.4
2020 YTD-23.8-18.5
1 year-5.0-12.7
3 years-7.8-8.2
5 years19.817.3
Since launch*502.3113.8
Source: Lipper, as at 31/08/2020, Class B, GBP, UK net tax with net income reinvested and no initial charges. *Fund Launch 20/03/2000.
FundIndexDifference
2020-11.1-13.0+1.9
2019-8.20.6-8.8
201814.79.0+5.7
201724.318.1+6.2
2016-0.62.2-2.8
Source: Lipper, as at 30/06/2020, Class B, GBP, UK net tax with net income reinvested and no initial charges.

Prices

Class A
448.70p
2.19%
Class B
513.00p
2.17%

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 +4.5% versus the FTSE All-Share that returned +2.4%.

The disease outlook remains the key variable for both economies and markets. The economic data both in the UK and elsewhere remains mixed. Certain segments such as retail sales and housing transactions have recovered strongly while business investment and employment remain depressed. The impending wind down of the government’s job retention scheme and support for the self-employed will put further pressure on the economy. September and October are key months for many businesses, particularly those exposed to business investment, and will provide a gauge of the strength 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.

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. William Hill gained as a strong set of interim results reassured investors and enabled them to focus on the upside from the US opportunity. As we wrote last month the US offers significant potential upside that is not yet reflected in the current share price. GVC also rose as sentiment towards the sector was aided by the announcement that IAC, led by US billionaire Barry Diller, had taken a significant stake in US casino operator, MGM, largely because of the potential upside from online gambling. 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.

Serco declined as management used the group’s in-line interim results to highlight the medium-term uncertainty surrounding the impact of Covid-19. Despite limited to changes to analysts’ consensus forecasts the shares declined sharply. We would be careful to read too much into managements’ caution as Finance Director, Angus Cockburn, relishes his role as a dour Scottish accountant. Norcros declined for no discernible reason.

A new position was initiated in Grafton Group a distributor of construction products. The holding in Serco was increased in response to the share price fall.

Commentary by
Neil Veitch
Global & UK Investment Director
Craig Jeruzal
UK Investment Analyst
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 +4.5% versus the FTSE All-Share that returned +2.4%.

The disease outlook remains the key variable for both economies and markets. The economic data both in the UK and elsewhere remains mixed. Certain segments such as retail sales and housing transactions have recovered strongly while business investment and employment remain depressed. The impending wind down of the government’s job retention scheme and support for the self-employed will put further pressure on the economy. September and October are key months for many businesses, particularly those exposed to business investment, and will provide a gauge of the strength 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.

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. William Hill gained as a strong set of interim results reassured investors and enabled them to focus on the upside from the US opportunity. As we wrote last month the US offers significant potential upside that is not yet reflected in the current share price. GVC also rose as sentiment towards the sector was aided by the announcement that IAC, led by US billionaire Barry Diller, had taken a significant stake in US casino operator, MGM, largely because of the potential upside from online gambling. 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.

Serco declined as management used the group’s in-line interim results to highlight the medium-term uncertainty surrounding the impact of Covid-19. Despite limited to changes to analysts’ consensus forecasts the shares declined sharply. We would be careful to read too much into managements’ caution as Finance Director, Angus Cockburn, relishes his role as a dour Scottish accountant. Norcros declined for no discernible reason.

A new position was initiated in Grafton Group a distributor of construction products. The holding in Serco was increased in response to the share price fall.

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.

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
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