The Fund aims to achieve long-term capital growth by investing in UK listed companies across the broad market cap range.

August was a quieter, low volume month reflecting the seasonally slower period. The FTSE 100 earnings season was a pleasingly positive one and we saw some overspill from Chinese interventions to cool and exert greater control over the economy and society more broadly, but otherwise it was noticeably less eventful than recent periods. Corporate finance departments clearly didn’t get the memo however, with the relentless onslaught on UK companies showing no sign of abatement with 39 UK plcs now having falling under the bidders’ knife and approximately 400 UK companies as a whole if private businesses are included, both comfortably on target to break records. At some stage one might have reasonably expected this to seep into valuations and risk premiums in the domestic market but there is scant evidence to date of that happening. According to Morgan Stanley data the UK continues to languish at a whopping 46% discount to the MSCI World Index, and the $42bn that has left the market since Brexit remains remarkably intransigent to any return. This disconnect between the reality on the ground and the prevailing valuations is where the opportunity resides. It’s not just corporates and private equity doing the buying either but individual company directors too, a notable development given the scale of the rally from the Covid-19 lows; we share their confidence and have added to our own Fund holdings accordingly.

A number of our larger cap holdings reported during the month and the results were broadly very constructive, especially in the context of what the share prices are discounting. Foremost here were the Banks which without exception comfortably beat estimates and Rolls Royce where the change in tone and confidence for the future was especially evident. Smaller cap result season is still largely ahead of us, though we did see a disappointing statement from Venture Life where there has been a slowdown in hand sanitizer volumes and problems with a Chinese customer; neither are enough to erode the core thesis behind our holding but we are realistic enough to expect the strong momentum behind the shares to dissipate for the foreseeable future.

Elsewhere we saw noticeable strength in Accesso, our provider of ecommerce and digital solutions to leisure outlets. This was subsequently justified by a strong trading update underpinning its third positive profit warning of the year so far. This was a highly pleasing outcome and we see considerably further upside in this unique asset. Accesso is a name we knew well historically and one we identified as being a clear beneficiary of structural changes post Covid-19. We backed the company’s proactive investment programme and accompanying fundraise last year and since then the business has gone from strength to strength. Simply put, the company’s solutions have gone from a nice to have to must have; theme parks and other high-volume destinations need to offer mobile ticketing, virtual queuing and digital ecommerce to their customers to allow efficient capacity management in the new world, fulfil local regulations and the increasing expectations of their customers. But Accesso products don’t just fulfil a need, they deliver substantial value in terms of the data they generate, helping the planning and flow of the park, managing staff efficiency and vastly improving the guest experience. This positive flywheel effect drives more sales (the pipeline has nearly tripled), more upsell opportunities and more investment back into the core proposition. As a result, we believe the growth trajectory here continues to be materially underestimated and it remains a conviction position within the portfolio.

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. All performance figures illustrate performance from the first full day that the Fund held investments. During the period 6 November 2001 to 7 May 2003 the performance record is based on the pre-existing share class that had a higher management fee.

FTSE International Limited (“FTSE”) © FTSE 2017. The Industry Classification Benchmark (“ICB”) and all  rights in it are owned by and vest in FTSE and/or its licensors. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence. Neither FTSE, nor its licensors accept any liability for any errors or omissions in the ICB. No further distribution of ICB is permitted without FTSE’s express written consent.

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 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.

Amongst other characteristics, the Fund promotes environmental and social characteristics and invests in companies that apply good corporate governance.  JOHCM Funds (Ireland) Limited, the Fund’s manager has therefore categorised the Fund as meeting the provisions set out in Article 8 of EU Regulation 2019/2088 on sustainability-related disclosures in the financial services sector (“SFDR”).  

J O Hambro Capital Management Limited (“Investment Manager”) seeks to invest only in companies that meet minimum sustainability practices. The Investment Manager refers to the ten principles of the UN Global Compact, which promote sustainable and responsible corporate development in order to make globalisation more socially and ecologically focused. They fall into the categories of the protection of human rights, maintenance of appropriate labour standards, promoting environmental responsibility and the prevention of corruption.   

In order to achieve the above, the Fund excludes investment in those companies it considers “non-sustainable”. The issuer of a security is considered “non-sustainable” if it is “non-compliant” with the UN Global Compact. The selection criteria may not be disapplied or overridden by the Investment Manager. We utilise the UN Global Compact assessment of our third-party provider, Sustainalytics. 

The exclusion criteria referred to above will be applied prior to making any investment and the fund’s portfolio will be monitored for any investments which breach these exclusion criteria on a periodic basis. For this purpose, the Investment Manager will rely on data (and the ESG definitions aligned with that data) from a third-party provider, or such other source as the Investment Manager determines.  

In order to measure and monitor the environmental characteristics of the Fund, the Investment Manager will review the carbon footprint of the portfolio and environmental data published by its investee companies.  For the social characteristics of the Fund, the Investment Manager will review whether investee companies have implemented appropriate policies and structures to support sustainable business practices.  The Investment Manager will also consider data provided by a third- party data provider, although this will not necessarily directly influence whether a company will be bought or sold by the Fund. 

Investee companies must follow good governance practices. This requires investee companies to adhere to minimum standards in various areas including sound management structures, employee relations, remuneration of staff and tax compliance. The Investment Manager is a signatory to the UK Stewardship Code 2012, is requesting to be a signatory to the UK Stewardship Code 2020 (together the “Code”) and is a signatory to the UN Principles for Responsible Investment (the “UNPRI”). As a signatory to the Code and the UNPRI, the good governance practices of investee companies are assessed by the Investment Manager prior to making an investment and periodically thereafter.

The Fund uses the FTSE All Share Total Return Index for performance fee calculation purposes only and it is not, nor is it intended to be, aligned and/or consistent with the environmental and social characteristics promoted by the Fund.