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

Events continue to evolve at a rapid pace in this truly unique crisis. From multiple record setting days in both directions by the stockmarket, to federal & government support of truly eye-watering proportions and from there to a negative oil price. Valuation dispersions which were already at all-time extremes have accelerated still further, creating staggering differentials between the haves and have nots. Many businesses that were thriving a few short weeks ago now face a bleak future in a social distancing world, a world of quantum structural shifts, stranded assets and deep recession. Meanwhile, work from home inboxes strain with essays and predictions of the post-Covid environment, ironically authored by the very same discredited economists & strategists who failed to anticipate its scale and magnitude in the first place. That they are consumed simply highlights our innate desire for certainty and predictability, but the cold reality is that at the present moment that is as far away as ever. From an investment perspective, that means balance sheet strength, clear valuation support and decisive, agile management teams become critical. The winners coming out of this fraught experience will, in many cases, be very different from the winners going into it. That should favour mispriced and undiscovered growth and points to an immense opportunity for our process.  It will take patience, discipline and pragmatism; and it will certainly not be easy - pronounced volatility and sharp rotations will be an inevitable consequence of the times we are currently in.

We have consistently said since this turmoil began that it will be difficult to judge where we really are until we see a period of relative calm and we stick to that view. Nevertheless it was clearly pleasing to see a strong bounce back in performance over the month and most particularly as it was generated entirely from stock selection rather than sector allocation.

Negative contributions came principally from our underweight positions in large cap pharmaceuticals and consumer staples. The positive side, however, was driven by encouraging progress at Goco Group, Elecosoft and Volex (constructive trading updates) as well as Rank, NBrown and Sigma Capital (recovery from unjustified March weakness). The two standout performers however were Avacta Group and Venture Life, both longstanding holdings and significant positions in the portfolio.

These two possess a number of similar characteristics. Both have been unloved and marooned in a moribund UK small-cap market, buffeted by the triple forces of paralyzing Brexit uncertainty, the progressive institutional shift up the market capitalization scale and the destructive legacy of Woodford and the scorched earth he left behind. As a result, they have been frustrating performers (indeed both have featured periodically on our ‘cyclical’ list of underperformers over the last 18-24 months) despite some incredibly encouraging fundamental progress. Consequently, as the terms of trade continued to improve and clear and compelling value was building underneath the share price, we had been adding to the positions, giving us robust holdings at very attractive prices and now subsequently benefiting from the strong reversal.

Venture Life is a leading developer, distributor and manufacturer of OTC medicines with a particular strength in oral hygiene. Rising awareness of the anti-bacterial properties these products have on the immune system is re-igniting growth in the category (particularly relevant in a post-Covid-19 world) and their consistent investment in emerging markets (especially China) has borne fruit with a bulging order book and culminating in the company’s largest ever contract. Combined with an underappreciated position in hand sanitizer, a derisory valuation, forecasts that are still too low and a very robust balance sheet we still see very significant upside from here.

Avacta is a unique Affimer scaffolding and diagnostics company, a potentially hugely valuable and adaptable drug delivery platform to Antibodies. Having already signed multiple collaborations and partnerships over the last several months (all effectively ignored by the stockmarket) in oncology and chemotherapy, the company has again demonstrated the value and versatility in its IP by utilizing this expertise to rapidly produce re-agents for an antigen test for Covid-19. This test is potentially game changing in that it is a simple, lateral flow device, similar to a pregnancy test strip with the results in 10-15 minutes. This is no fluke as the company has produced such tests before for the Zika virus. Already, strong credible partners such as Cytiva (GE Healthcare) and Adeptrix have agreed deals and more are expected to follow. This is self-evidently a massive potential opportunity for the company but it has also highlighted the enormous inherent worth in its platform. The shares have responded very powerfully, and, whilst we have clearly taken some profit commensurate with such an advance, we remain tremendously excited about its future.

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.

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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 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.