SVM UK Emerging Fund PLC reported positive contributions from 4Imprint Group, Beazley, Ideagen and Aveva Group (LSE:AVV) in the half year to 30 September, though its focus on growing businesses was not in favour in the wider market.
Net asset value return for the trust fell 27.1% compared to a negative 12.8% return in the IA UK All Companies sector average index as the company noted UK equities had fallen sharply and that share prices of smaller and medium sized companies fared worse than shares of the largest global businesses.
What's more, chairman Peter Dicks noted in the statement that the portfolio emphasises growth strategies and has low exposure to some of the areas in favour in the period such as energy, mining and the major pharmaceutical groups.
Over the five years to 30 September 2022, net asset value for the fund was down 23.8% and the share price down 14.9%, against the IA UK All Companies Sector Average Index return being up 3.2%.
Over 10 years the total return for the fund is 71.5%, versus the benchmark's 60.5%.
Last year the fund's shares showed a positive gain, but in the past six months 2022 the portfolio, which emphasises exposure to cash-generating, scalable businesses with a competitive edge that can protect margins and deliver growth, has seen share prices suffer in contrast with encouraging trading updates from the companies.
"On a range of measures, the fall has brought UK equities down to a significant valuation gap with many other world markets, a relative valuation last reached in 1989. It does appear that the UK economy will move into recession over the next few months but the disparity is extreme," said Dicks.