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SVM UK Emerging Fund plc

SVM UK Emerging Fund plc

Diversified portfolio of UK smaller companies

The Fund is a London listed closed ended investment trust and its aim is to provide long term capital growth through a diversified portfolio of UK smaller companies with a particular focus on the Alternative Investment Market.

SVM UK Emerging Fund plc

Diversified portfolio of UK smaller companies

The Fund is a London listed closed ended investment trust and its aim is to provide long term capital growth through a diversified portfolio of UK smaller companies with a particular focus on the Alternative Investment Market.

Overview

Fund Objective

The investment objective of the Fund is long-term capital growth from investments in smaller and medium sized UK companies. Its aim is to outperform the IA UK All Companies Sector Average Index on a total return basis.

Structure

The Fund is a London listed closed ended investment trust and its aim is to provide long term capital growth through a diversified portfolio of UK smaller companies with a particular focus on the Alternative Investment Market. Its benchmark is the IA UK All Companies Sector Average. It achieves its objective and to diversify risk by investing in shares and related instruments, controlled by a number of limits on exposures, levels of gearing and hedging decisions oversees by the Board of Directors.

Fund Details

Launch Date18 October 2000
BenchmarkIA UK All Companies Sector Average
Fund TypeInvestment Trust
Registered NoSC211841
ListingLondon Stock Exchange
Year End31 March
Half Year30 September
RICSVME
ISINGB0000684174

Data as at 31/08/2020.

Approach

Fund Approach

It is an unconstrained special situations fund of approximately 40 – 50 investments. Larger than average positions are often taken, however always being aware of good portfolio management. Typically investments are made on an absolute basis, aiming to make money for shareholders with relative outperformance of the benchmark of secondary importance. We invest in our highest conviction ideas irrespective of sector and size and employ leverage or hedging with the aim of improving the risk / reward characteristics.

The Fund has the ability to borrow money to enhance returns. This gearing can enhance benefits to shareholders but, if the market falls, losses may be greater. Borrowing is normally on a short term basis to ensure maximum flexibility. The Fund also invests in synthetic equities ("CFD's") (long positions) and similar instruments as an alternative to holding actual stocks.

The Fund may also make use of hedging as an additional investment tool and to help reduce the potential for stockmarket weakness to adversely impact the portfolio. It aids flexibility and can allow exposure to a sector to be reduced with less disruption to the underlying long term portfolio.

Acquisitions

Potential acquisitions are identified using a range of sources from company meetings, broker and related contacts. Principally, positions are acquired through primary fundraisings rather than simply acquiring in the secondary market. The preference is to avoid new issues rather to concentrate on follow-on capital raises. Our aim is to participate in companies that are on the cusp of profitability that require modest funds to allow them to attain this level. Alternatively, in companies that have identified complementary business to bolt on to their existing model.

Disposals

An investment is generally made with an exit plan in mind. The sale process is as or if not more important than the original buy decision. The sale trigger is unique for each investment and typically a combination of rating, absolute share price, investment maturity and opportunity cost of holding the investment. In our view, it is never wrong to book an absolute profit.

Risk management

Although the Fund's benchmark is the IA UK All Companies Sector Average Index, the pursuit of the investment objective may involve exposure to companies on other exchanges and to unlisted investments. A high conviction investment approach is employed, which can involve strong sector or thematic positions.

No individual investment will exceed 10% of the portfolio on acquisition. Total exposure to unlisted shares is also limited to a maximum of 25% of the portfolio and has historically been less. The level of gearing, including the use of derivatives, is closely monitored and the Board has set an upper limit of 30% of net assets. Hedging up to a maximum of 15% has been approved by the Board and is conducted through CFD's or other index instruments.

Performance

The Fund typically under-performs strong positive markets and out-performs in flat and adverse ones. This is principally due to the mix of investments and the hedging operated by the managers.

Fund Managers

Margaret Lawson
UK Investment Director
30
Years at SVM
40
Industry Experience

Margaret joined SVM in 1990 as a founding director. She is lead manager of the SVM UK Growth Fund.

Prior to joining SVM, Margaret worked for FS Assurance as manager of the FS Balanced Growth Fund.

Academic Qualifications:
BSc (Hons) Economics

Professional Qualifications:

ASIP

Colin McLean
Managing Director & CIO
30
Years at SVM
46
Industry Experience

Colin was MD of FS Assurance Ltd and FS Investment Managers Ltd between 1974 and 1986. He left this position to be head of investments of Scottish Provident's £2.5 billion funds, one of the group's five senior executives. In 1988 he was invited by Sir John Templeton to be MD of Templeton’s European operations. In 1990 he co-founded SVM.

Colin is a former Governor of CFA Institute and past vice-chairman of CFA UK.

He is a regular contributor to the financial publications and guest on Bloomberg TV & Radio, CNBC, BBC TV and Radio. He is a frequent conference speaker on investment, hedge funds and behavioural finance.

Academic Qualifications:
MBA (distinction) Economic Stats
MA (Hons) Political Economy

Professional Qualifications:

FSIP, FIA, FCSI

Prices

Share Price
70.00p
0.00%

The prices shown are mid prices as at close of business and are updated here the following morning.

Source: Lipper, as at 25/09/2020.

NAV
107.05p

The NAV figure is calculated by State Street using bid prices.

Source: State Street, as at 31/08/2020.

Literature

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