The Fund aims to achieve long-term capital growth and to generate a dividend yield that is above that of the FTSE All-Share Index average. The Fund focuses predominantly on stocks within the FTSE 350 Index that generate a prospective yield above that of the FTSE All-Share Index average. The Fund's performance benchmark is the FTSE All-Share Total Return Index denominated in sterling.Please note that for capacity reasons the Fund is now 'soft-closed' to new direct investors.

The prospect of divergence in economic policy between the Federal Reserve (Fed) and the Bank of England (and the European Central Bank (ECB)) came firmly into view this month. In the US, investors have progressively removed the anticipated interest rate cuts during 2024 as most measures of inflation have proven to be stubbornly persistent. In contrast, the inflation rate in the UK continues to decelerate, falling to 3.2% in March, although this was marginally higher than expected. This is less than half the rate in September, with goods inflation below 1% compared to a peak of 15% in October 2022. This nascent pick up in UK economic activity provides the Bank of England with a conundrum. Inflation returning close to target next month allows, in principle, the process of monetary easing to begin, but with all lead indicators suggesting a resumption of growth has already started, there may be some temptation to sit on their hands. However, part of the reason activity has started to pick up is because consumers and businesses are expecting some interest rate cuts in the next few months and a failure to deliver those could stall the recovery.  As such, we anticipate split opinions across the nine MPC members, which has been reflected in speeches made by individuals such as Ramsden and Pill this month which had different tones. The economy probably only needs a couple of rate cuts to trigger a meaningful acceleration in consumer spending, but the window of opportunity to deliver those cuts is relatively narrow.

The UK stock market’s strength continued in April (with the FTSE All Share up 3.19%). Within this overall positive trend, the change in market leadership that has been evident since November continued, benefiting the Fund. The latter was up 4.73%, outperforming the market by 1.49%. Year-to-date, the Fund is up 10.53% compared to the market, which is up 6.73%. The Fund benefited from M&A activity this month. The BHP bid for Anglo American led to a sharp rise in the latter (up 39% relative), whilst Tyman rose (up 28% relative) following its agreed bid from Quanex. The third bid the Fund received was for Hipgnosis, which was up 50% relative. Last month’s bid for DS Smith, fell after Mondi pulled out of the process, leaving DS Smith and International Paper to continue with the planned merger uncontested. 

There's a sense that the UK market's prolonged period in the investment wilderness is finally over and the example of Japan shows how dramatically appetite can change if the catalysts are there. However, we would encourage our investors to look at their current UK allocation and ensure it is invested in funds with a genuine 'Value' bias. Sadly, style drift has been a significant feature of the UK market over the last 5-7 years, and most funds have morphed into a ‘GARP/Quality’ growth style, which is unlikely to outperform in this new environment.     

Data shown net of fees, net income reinvested. Please note that all fund performance is shown against the FTSE All-Share TR 12pm adjusted. Performance of other share classes may vary and is available on request.Where shown, monthly returns table shows compounded discrete monthly performance.

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Past performance is no guarantee of future performance. The value of an investment and the income from it can fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested. The annual management charge is deducted from the capital of the Fund. This will increase the income from the Fund but may constrain or erode potential for capital growth. The Funds investment include shares in small-cap companies and these tend to be traded less frequently and in lower volumes than larger companies making them potentially less liquid and more volatile.