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

February was another noisy macro month, dominated by the shift in the inflation narrative, which itself has stemmed from broadly better-than-expected economic data, rising commodity prices and encouraging early signs on vaccine rollout. Combined with more resilient corporate results than expected, the end result has been a notable shift up in yields and an acceleration of the stock market rotation that we began to see at the back end of last year. We have long commented that it would not take much of shift in the price of risk for some of the high PE ‘fans favourites’ to start to look vulnerable, and there are clear early signs that this is starting to take hold. Long duration growth and perceived safety have been egregiously mispriced for an extended period and our valuation discipline has largely kept us away from these areas; an extended correction here is long overdue in our opinion and, whilst there may be some collateral damage in one or two of our names along the way, we would be net beneficiaries were it to continue. Meanwhile, we have a whole host of companies that have been trading on depressed multiples of depressed profits despite possessing strong balance sheets and underappreciated growth potential. These shares are beginning to wake from their slumber, but given the profound disconnect with their improving fundamentals there is potentially a very long way to go, a view backed by clear evidence of generally strong trading, excellent results or both.

The Fund had a pleasing month, helped by the positive market mix impact described above and some very encouraging progress in stock specific names. Importantly, there were no clear disappointments, with the main detractors over the period actually being our underweight positions in HSBC, Prudential and Royal Dutch Shell.

Strong contributions came from our financials book, most notably Just Group and Natwest. Although both are clearly helped by rising rates, the former has continued to react to the very strong trading update produced last month, allied to an appreciably improved balance sheet position and the clear structural growth opportunity ahead. Natwest delivered excellent results and despite a decent move in the shares over the last few months still look completely the wrong price. The repositioning of the group into higher return areas is undeniably bearing fruit, and, alongside past investment in its digital capability, has combined to deliver well above market volume growth with strong cost efficiency. Continued execution along these lines should bring 12-13% RoTE in the foreseeable future and yet the stock still languishes on 0.7x book with close to the strongest capital position in Europe.

Two new positions entered into the portfolio. Trufin has an exciting and disruptive proposition in a couple of market verticals and the resources to invest behind them to accelerate growth. With the explosive growth in PC and console gaming during the pandemic, its automated marketing monetisation solution, Playstack, looks especially well-placed and an impressive roster of blue chip brands attests to its potential. Finally, we have re-entered Moneysupermarket, a stock we know well from past ownership and from our successful ownership of close competitor Goco Group (and whose sale of our remaining position financed the purchase). We believe new management has laid out a credible plan to re-invigorate the franchise and unlock the immense potential from the treasure trove of data within.

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.