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SVM World Equity Fund

SVM World Equity Fund

Unwavering focus on risk/reward

The fund, managed by Neil Veitch, aims to achieve long term growth by investing in businesses worldwide where Neil believes the current valuation offers an opportunity. His valuation driven approach ensures he finds the right businesses to invest in, at the right price and also knows the right time to sell.

SVM World Equity Fund

Unwavering focus on risk/reward

The fund, managed by Neil Veitch, aims to achieve long term growth by investing in businesses worldwide where Neil believes the current valuation offers an opportunity. His valuation driven approach ensures he finds the right businesses to invest in, at the right price and also knows the right time to sell.

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 ACWI IMI. The Fund will identify investment opportunities in companies globally whose future growth is not reflected in current market expectations. The Fund may invest in other permitted securities.

Approach

With a vast array of companies to choose from, successful investing in global equities depends on a good understanding of what makes a good investment. We aim to find strong companies that we can buy at an attractive price.

We focus on the factors that will move companies’ share price such as sales patterns, margins and cash flow. However, we do not simply invest for growth – nor for current value. 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 company analysis and financial modelling, and our understanding of what’s changing in companies and their industries.

Fund Details

Launch Date1 December 2010
BenchmarkMSCI ACWI IMI Index
IA SectorGlobal
Type of SharesAccumulation
XD Date31 December
Pay Date30 April
Fund Size£14.9m

Data as at 31/12/2020.

Fund Manager

Neil Veitch
Global & UK Investment Director
14
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

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.

Microsoft8.4
Alphabet7.5
SK Hynix5.6
Synthomer4.7
Hitachi3.9
Denka3.9
Visa7.3
Entain5.3
Ryanair 4.4
Jadestone Energy2.9
Energean2.2
Lundin Energy2.0
Uniphar3.9
Roche Holdings3.4
Prudential3.8

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 World Equity Fund portfolio will vary considerably from the benchmark index and from other funds that are in the same IA sector.

Top 10 Holdings (%)

Microsoft8.4
Alphabet7.5
Visa7.3
SK Hynix5.6
Entain5.3
Synthomer4.7
Ryanair 4.4
Hitachi3.9
Denka3.9
Uniphar3.9
Rest of Portfolio45.2

Source: SVM, as at 31/12/2020

Sector Exposure (%)

Technology24.8
Industrials14.2
Consumer Services13.5
Financials11.1
Oil & Gas9.0
Basic Materials8.6
Health Care7.5
Consumer Goods5.0

Source: SVM, as at 31/12/2020

Size Analysis (%)

Mega Cap (>£50bn)32.2
Large Cap (<£50bn)16.0
Mid Cap (<£10bn)23.1
Small Cap (<£1bn)22.5

Source: SVM, as at 31/12/2020

Geographic Analysis (%)

North America29.6
United Kingdom36.2
Europe (excluding UK)13.7
Asia Pacific (excluding Japan)6.5
Japan7.8

Source: SVM, as at 31/12/2020

Currency Exposure (%)

Euro10.2
Sterling36.2
Europe non-Euro5.4
US Dollar34.1
Japanese Yen7.8
Others6.5

Source: SVM, as at 31/12/2020

Show piebar chart

This Month's Featured Stock

Entain

Entain plc (formerly GVC) is one of the world’s leading sports betting and gaming companies. The group’s brands include Ladbrokes and Coral in the UK. Entain also has a 50% stake in BetMGM in the US.

Over the past decade, Entain has grown from a small business operating mainly in unregulated markets to a global leader with 99% of revenues from regulated markets (this will be 100% by 2023). It has taken an industry lead on sustainability, recently making a commitment to invest £100m in a foundation designed to focus on responsible gambling, men’s mental health and grass-root sports. It has strengthened its corporate governance with the appointment of a new Chairman, CEO and independent non-executive directors. In short, the company has addressed all the (often unjustified) accusations thrown at it by the media and should be viewed as increasingly ‘investable’.

The timing couldn’t be better. Entain’s position in the newly regulating US market is highly exciting. Alongside MGM International, Entain have invested heavily in the BetMGM joint venture. The combination of MGM’s sizable customer base and land-based casinos with Entain’s online and technical expertise is a formidable one. BetMGM is targeting a 15-20% share of what will be a $20bn+ market.

Post-month end, Entain was subject of a takeover bid from MGM International. We believe the huge potential of the US market, plus opportunities in other areas such as Latin America, make companies with proven online success and fully-integrated technical ‘stacks’ very attractive. Entain is currently trading on a 2021 EV/EBITDA of c.12x, a level which still undervalues its growth potential.

Performance

Performance (%)

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FundIndex
1 month4.92.4
2020 YTD14.215.2
1 year14.215.2
3 years29.934.2
5 years78.987.2
Since launch*191.8183.2
Source: Lipper, as at 31/12/2020, Class B, GBP, UK net tax with net income reinvested and no initial charges. *Fund Launch 01/12/2010.
FundIndexDifference
202014.215.2-1.0
201930.622.3+8.3
2018-12.9-5.2-7.7
201712.914.5-1.6
201622.024.4-2.4
Source: Lipper, as at 31/12/2020, Class B, GBP, UK net tax with net income reinvested and no initial charges.

Prices

Class A
403.50p
1.43%
Class B
451.50p
1.44%

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

Source: State Street, as at 15/01/2021.

Commentary

Equities made further gains during December. Investors were caught in the crosscurrents of the discovery of a new, more transmissible, Covid-19 variant and the announcement of a Brexit trade deal. For the month the fund returned 4.9% versus the MSCI ACWI IMI index that returned 2.5%.

Stocks enjoyed a positive start to December as investors anticipated the introduction of mass vaccinations. However, the discovery of a number of new Covid variants and the likelihood of further lockdowns led to a pullback. Markets regained their poise as the UK and the EU finally agreed a trade deal. GBP and stocks exposed to the domestic economy rallied as the tail-risk of a no-deal Brexit was removed. The agreement is centred on traded goods and excludes the UK’s service sector. The performance of UK banks and life assurers was more muted as concerns grew over the future access of the UK’s hugely important financial services sector to European markets.

The conclusion of the Brexit deal highlights the significant constraints policymakers operate under. Despite bellicose rhetoric, politicians have a strong tendency to follow the path of least resistance. This is not to say that significant policy errors cannot occur, but that they happen less frequently than many a shrill commentary suggests.

In response to increasing case numbers many countries tightened Covid restrictions further. We continue to believe that markets will largely look through their short-term economic impact and focus on the potential for a significant recovery in the second half of the year. One of the biggest uncertainties as vaccines become available, and life begins to return to normal, will be the attitude of consumers and businesses towards savings and investment. The household savings rate has risen substantially during the pandemic and while this will come down the quantum and timing is unclear. Perhaps we are merely projecting our own biases, but we feel it is unlikely that households will dramatically increase their level of precautionary savings in a post-pandemic world. The recent significant rise in M&A activity certainly suggests corporates see little need to save for a rainy day.

There were many large positive contributors to performance over the month. DRAM manufacturers, Micron and SK Hynix, gained as the outlook for memory pricing continues to improve. Both companies have steadily increased their financial resilience over recent years and are well placed to enjoy a re-rating when the DRAM cycle finally turns. Denka benefitted from improved sentiment towards cyclical stocks. Prudential Plc rose as investors looked for reflation plays. The ‘Pru’ has been a notable underperformer relative to its nearest peer, AIA, over the last twelve months and with Brexit out of the way we think there is scope for this to reverse. Entain (formerly GVC) gained as the company continued to highlight the progress it was making in the US market. After something of a slow start, recent data suggests that the company is taking greater share in those states that have recently opened up. Creo Medical climbed as the company announced that one of its products had successfully been used to ablate a pancreatic tumour with no procedural complications. The device has the same dimensions as a routine biopsy needle and can be used in other highly perfused organs such as the liver, kidneys and lungs.

There were no significant disappointments.

Commentary by
Neil Veitch
Global & UK Investment Director
As at 31/12/2020.

Equities made further gains during December. Investors were caught in the crosscurrents of the discovery of a new, more transmissible, Covid-19 variant and the announcement of a Brexit trade deal. For the month the fund returned 4.9% versus the MSCI ACWI IMI index that returned 2.5%.

Stocks enjoyed a positive start to December as investors anticipated the introduction of mass vaccinations. However, the discovery of a number of new Covid variants and the likelihood of further lockdowns led to a pullback. Markets regained their poise as the UK and the EU finally agreed a trade deal. GBP and stocks exposed to the domestic economy rallied as the tail-risk of a no-deal Brexit was removed. The agreement is centred on traded goods and excludes the UK’s service sector. The performance of UK banks and life assurers was more muted as concerns grew over the future access of the UK’s hugely important financial services sector to European markets.

The conclusion of the Brexit deal highlights the significant constraints policymakers operate under. Despite bellicose rhetoric, politicians have a strong tendency to follow the path of least resistance. This is not to say that significant policy errors cannot occur, but that they happen less frequently than many a shrill commentary suggests.

In response to increasing case numbers many countries tightened Covid restrictions further. We continue to believe that markets will largely look through their short-term economic impact and focus on the potential for a significant recovery in the second half of the year. One of the biggest uncertainties as vaccines become available, and life begins to return to normal, will be the attitude of consumers and businesses towards savings and investment. The household savings rate has risen substantially during the pandemic and while this will come down the quantum and timing is unclear. Perhaps we are merely projecting our own biases, but we feel it is unlikely that households will dramatically increase their level of precautionary savings in a post-pandemic world. The recent significant rise in M&A activity certainly suggests corporates see little need to save for a rainy day.

There were many large positive contributors to performance over the month. DRAM manufacturers, Micron and SK Hynix, gained as the outlook for memory pricing continues to improve. Both companies have steadily increased their financial resilience over recent years and are well placed to enjoy a re-rating when the DRAM cycle finally turns. Denka benefitted from improved sentiment towards cyclical stocks. Prudential Plc rose as investors looked for reflation plays. The ‘Pru’ has been a notable underperformer relative to its nearest peer, AIA, over the last twelve months and with Brexit out of the way we think there is scope for this to reverse. Entain (formerly GVC) gained as the company continued to highlight the progress it was making in the US market. After something of a slow start, recent data suggests that the company is taking greater share in those states that have recently opened up. Creo Medical climbed as the company announced that one of its products had successfully been used to ablate a pancreatic tumour with no procedural complications. The device has the same dimensions as a routine biopsy needle and can be used in other highly perfused organs such as the liver, kidneys and lungs.

There were no significant disappointments.

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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