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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 will invest at least 80% in global equities and other equity related instruments. 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£18.2m

Data as at 30/06/2021.

Fund Manager

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

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.

Alphabet8.1
Microsoft7.9
Micron Technology4.7
Hitachi4.6
Synthomer4.2
Alpha FMC3.9
Visa7.5
Entain4.8
Norcros3.7
Uniphar5.5
Roche Holdings3.0
Bristol-Myers Squibb1.9
Jadestone Energy2.7
Longboat Energy1.3
Pantheon Resources1.0
Prudential3.2

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

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 (%)

Alphabet8.1
Microsoft7.9
Visa7.5
Uniphar5.5
Entain4.8
Micron Technology4.7
SK Hynix4.7
Hitachi4.6
Synthomer4.2
MagnaChip Semiconductor4.2
Rest of Portfolio43.7

Source: SVM, as at 30/06/2021

Sector Exposure (%)

Information Technology30.2
Industrials19.5
Health Care13.8
Consumer Discretionary10.1
Communication Services8.1
Materials8.1
Energy5.8
Financials3.2

Source: SVM, as at 30/06/2021

Size Analysis (%)

Mega Cap (>£50bn)40.5
Large Cap (<£50bn)17.9
Mid Cap (<£10bn)15.0
Small Cap (<£1bn)25.6

Source: SVM, as at 30/06/2021

Geographic Analysis (%)

North America38.9
United Kingdom34.0
Europe (excluding UK)14.0
Asia Pacific (excluding Japan)5.4
Japan6.6

Source: SVM, as at 30/06/2021

Currency Exposure (%)

Euro11.0
Sterling34.1
Europe non-Euro3.0
US Dollar38.9
Japanese Yen6.6
Others5.4

Source: SVM, as at 30/06/2021

Show piebar chart

This Month's Featured Stock

Alpha Financial Markets Consulting

Alpha Financial Markets Consulting (‘Alpha’) provides a wide range of consulting services to the asset management, wealth management and insurance industries. The company serves over 400 clients and has operations across Europe, North America and Asia.

Since its 2017 IPO, Alpha has consistently delivered strong operational and financial performance. Despite the difficulties caused by Covid, the group has made continued progress over the past year. In the year to March 2021, net fee income increased by 10% y/y as consultation utilisation rates and fee-rates remained strong and the group navigated the difficulties of working remotely with clients. Demand for Alpha’s services are driven by a combination of increasing regulation, technological changes, and the requirement to manage cost pressures. These should provide a solid platform for longer-term growth.

Having already built an impressive reputation in the asset management industry, where it works with 90% of the world’s top 20 asset managers, Alpha has been broadening its footprint both organically and via M&A activity. The recent acquisition of Lionpoint, a US-based consultancy to the Alternative Investment Industry, will provide exposure to a fast-growing market and give Alpha increasing scale in North America.

Alpha currently trades on an estimated March 2022 PE of c.20x, a valuation that does not appear stretched when set against its target of doubling the size of the business over the next 4 years. With the ability to complement impressive organic growth with returns-enhancing M&A, we expect the stock to outperform.

Performance

Performance (%)

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FundIndex
1 month2.33.7
2021 YTD19.710.4
1 year41.825.8
3 years53.343.5
5 years114.392.8
Since launch*249.3213.6
Source: Lipper, as at 30/06/2021, Class B, GBP, UK net tax with net income reinvested and no initial charges. *Fund Launch 01/12/2010.
FundIndexDifference
202141.825.8+16.0
20204.95.5-0.6
20193.18.1-5.0
20188.110.0-1.9
201729.323.6+5.7
Source: Lipper, as at 30/06/2021, Class B, GBP, UK net tax with net income reinvested and no initial charges.

Prices

Class A
461.00p
-0.26%
Class B
517.90p
-0.27%

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

Source: State Street, as at 03/08/2021.

Commentary

Equities traded sideways in June. The yield curve continued to flatten, especially in the immediate aftermath of this month’s meeting of the Federal Reserve. Beneath the surface both defensive and growth stocks traded much better as investors fretted over the impact of the Delta Covid variant. The variant, which first originated in India, is now the dominant strain in many countries including the UK. While there is little sign that Delta causes more serious illness, it is clearly more transmissible and has brought into the question the speed of re-openings. The fund returned +2.3% versus the MSCI ACWI IMI NR Index that delivered +4.1%.

Despite the flattening of the yield curve, we think it is premature to anticipate the end of the cycle. Fiscal and monetary policy remain extremely supportive and much of the world has still to fully open-up. In those countries where vaccinations, and therefore re-opening, are furthest advanced, economies are robust. US house price growth accelerated at its fastest pace in over 30 years for the second month in a row with strong demand and a shortage of supply leading to prices increasing 14.6% year on year. In the UK, the June Nationwide house price index rose 13.4%. In both countries ‘survey’ measures of economic activity are strong across the board.

For the first time in many years the political consensus is very much in favour of fiscal stimulus. The political wrangling over President Biden’s infrastructure bill continues but it is highly unlikely that the US will fall short in stimulating the economy. In Europe, the German finance minister, Olaf Scholz, dismissed suggestions that German and EU fiscal rules should be tightened. Strong economic growth, stimulative policy, and low real interest rates continue to fuel debate over the inflation outlook. Substantially tighter monetary policy remains the biggest risk for asset markets but looks unlikely in the short-term. After a period of consolidation, we expect equities to move higher in the second half.

Entain rose as analysts upgraded their estimates for the size of the US online sports betting market. Sentiment was further helped by news that the Canadian Senate had passed legislation to legalise single-event sports betting in the country. Roche gained as the unexpected US approval for Biogen’s Aduhelm drug for the treatment of Alzheimer’s increased interest in the potential for Roche’s Gantenerumab product. The two drugs have the same mechanism of action and the upcoming results of Gantenerumab’s Phase 3 trial should provide further insight. The market opportunity is significant as Alzheimer’s patients are woefully underserved by current drug treatments. Hitachi outperformed as the group’s capital markets day reminded investors of the significant progress it has made in transitioning itself towards higher value-added businesses. Despite the recent rise in the share price, we think there is scope for a further re-rating. Microsoft and Amazon rebounded strongly in response to the flattening yield curve. The fund’s energy holdings moved higher alongside the increase in the oil price. The rise of the Delta variant led to increased uncertainty over the speed of re-opening and adversely impacted both Ryanair and Menzies.

New units were taken in Rexel and International Paper. The holding in Team 17 was exited.

Commentary by
Neil Veitch
Global & UK Investment Director
As at 30/06/2021.

Equities traded sideways in June. The yield curve continued to flatten, especially in the immediate aftermath of this month’s meeting of the Federal Reserve. Beneath the surface both defensive and growth stocks traded much better as investors fretted over the impact of the Delta Covid variant. The variant, which first originated in India, is now the dominant strain in many countries including the UK. While there is little sign that Delta causes more serious illness, it is clearly more transmissible and has brought into the question the speed of re-openings. The fund returned +2.3% versus the MSCI ACWI IMI NR Index that delivered +4.1%.

Despite the flattening of the yield curve, we think it is premature to anticipate the end of the cycle. Fiscal and monetary policy remain extremely supportive and much of the world has still to fully open-up. In those countries where vaccinations, and therefore re-opening, are furthest advanced, economies are robust. US house price growth accelerated at its fastest pace in over 30 years for the second month in a row with strong demand and a shortage of supply leading to prices increasing 14.6% year on year. In the UK, the June Nationwide house price index rose 13.4%. In both countries ‘survey’ measures of economic activity are strong across the board.

For the first time in many years the political consensus is very much in favour of fiscal stimulus. The political wrangling over President Biden’s infrastructure bill continues but it is highly unlikely that the US will fall short in stimulating the economy. In Europe, the German finance minister, Olaf Scholz, dismissed suggestions that German and EU fiscal rules should be tightened. Strong economic growth, stimulative policy, and low real interest rates continue to fuel debate over the inflation outlook. Substantially tighter monetary policy remains the biggest risk for asset markets but looks unlikely in the short-term. After a period of consolidation, we expect equities to move higher in the second half.

Entain rose as analysts upgraded their estimates for the size of the US online sports betting market. Sentiment was further helped by news that the Canadian Senate had passed legislation to legalise single-event sports betting in the country. Roche gained as the unexpected US approval for Biogen’s Aduhelm drug for the treatment of Alzheimer’s increased interest in the potential for Roche’s Gantenerumab product. The two drugs have the same mechanism of action and the upcoming results of Gantenerumab’s Phase 3 trial should provide further insight. The market opportunity is significant as Alzheimer’s patients are woefully underserved by current drug treatments. Hitachi outperformed as the group’s capital markets day reminded investors of the significant progress it has made in transitioning itself towards higher value-added businesses. Despite the recent rise in the share price, we think there is scope for a further re-rating. Microsoft and Amazon rebounded strongly in response to the flattening yield curve. The fund’s energy holdings moved higher alongside the increase in the oil price. The rise of the Delta variant led to increased uncertainty over the speed of re-opening and adversely impacted both Ryanair and Menzies.

New units were taken in Rexel and International Paper. The holding in Team 17 was exited.

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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