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.

Economic data in the UK and Europe has generally continued to be a little firmer than expected. In the UK, the Citigroup economic surprise index hit a one year high driven by various positive readings, like those seen in Europe. The services PMI Index hit an 11-month high, backed up by some robust trading updates from many bellwether consumer exposed stocks in the UK, such as Whitbread and EasyJet. Activity in the housing market has continued to recover, with March transactions 26% higher than February and although retail sales volumes were down 0.9% month on month; volumes were still 0.6% higher over Q1. The UK labour market is exhibiting some interesting developments. Whilst unemployment has risen slightly to 3.8%, more people have re-entered the labour force, particularly those over 50 and students. This increased participation rate is exactly what the economy needs to expand and will also help limit wage inflation, with the rolling 3-month growth rate slowing to its lowest level for a year, despite all the industrial action. Inflation in the UK has come down less quickly than expected, with CPI staying above 10% this month, driven mainly by food price inflation of almost 20%. However, next month will see the 40% increase in gas and electricity prices drop out of the annual comparator, and as such, it will fall to between 7-8% in April, with a likely resumption of real wage growth by the end June.

Markets started to regain poise in April, following a difficult month in March dominated by news flow around SVB and Credit Suisse. The UK FTSE All Share was up 2.52% and the Fund, whilst up 0.98%, underperformed the market. Year-to-date, the Fund is up 2.02%, whilst the FTSE All Share is up 5.41%. Despite a better tone at the overall market level, there was still a ‘risk’ off mentality at a sector/stock level, which lasted until the last few days of the month. Defensives we do not own, like Astra Zeneca and Diageo, were a headwind to the Fund’s relative performance. The main drags on performance during the month were the mining sector, with Central Asia Metals and Anglo American particularly weak.

We noted last month we had added one new stock, which we now highlight, having built it to a c.40-50bps position. We will continue to build this holding, Marks & Spencer’s (MKS), as we see results and capital allocation decisions made. We sceptically approached our assessment of MKS given its history and our (negative) preconceptions given that history.

We believe investors are far too focused on trying to anticipate each twist and turn of global macro developments and are in danger of missing how startlingly low many stocks’ multiples are in the UK stock market. The decline of UK valuations relative to global peers has been well discussed in many places over the last few months and April has seen a resurgence in corporate activity for UK listed stocks, with private equity and industrial operators taking advantage of the embarrassing multiples on offer.  Unless the valuation gap closes, we can only see an acceleration in the number and potential scale of the companies leaving the UK quoted arena at high premiums to current share prices.

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.