Markets are cutting up rough again and there is clear evidence of investors panicking in multiple asset classes.

One does not blame retail investors who joined the crypto crowd on the promise of easy returns now running for the exit and for many of these individuals this is their first experience of a bear market. The hope is that these people did not put all of their eggs in the crypto basket and that not too many savings pots have been sent to ‘Money Heaven’. As we have always said, the only true measure of risk is the chance of permanent capital loss and there is no mathematical formula for this, no matter what the textbooks may say. In these conditions one must keep a cool head and be disciplined in sticking to one’s stated investment strategy.

The Church House UK Equity Growth Fund began life 22 years ago during the wreckage of the Dot-Com Bubble in 2000 and has since weathered the Financial Crisis of 2008/9, Eurozone crises in 2010/11, Brexit and COVID. The Fund was created as the core UK equity holding for our private clients and we have always looked to invest in only the highest quality businesses and to take a long-term view. This approach has allowed us to stand with conviction during these volatile times and to be consistent in our investment policy.

During April, we continued to add to a number of our investments in the portfolio, such as Spirax-Sarco, Judges Scientific, Auto Trader and Fevertree, where recent share price falls reflect market panic and not, in our opinion, any material change to the attractive and enduring fundamentals of these businesses. To pick a few examples:

  • Spirax-Sarco: the global leader in steam systems and peristaltic pumps has seen shares fall by a third in six months. During that period economic conditions have become tougher thanks to higher inflation, Mr Putin and Chinese lockdowns, but Spirax has continued to grow and demand for their products is higher than ever. Steam remains the most reliable, hygienic and accurate medium for processes across multiple industries from sterilising food containers, to precision conditioning of operating theatres and many applications in between. The world needs steam engineering and Spirax-Sarco (based in Gloucestershire) are the best in the business.
  • Auto Trader: is the dominant platform for used car transactions in the UK. They have the largest market share and have done so since the 1980s, when their product was a magazine bought from the local newsagent. The fact that used cars are currently trading on huge premiums due to the lack of available new cars tells us that demand for cars in the UK remains robust and that the recent fall in Auto Trader shares is a short-term market issue and not a reflection of any material concerns at Auto Trader.
  • Fevertree: shares are down almost 50% in 2022. Nobody seems to have told the share price that the sun is out, pubs are open and a glorious summer of British sport and staycations lies ahead – all conditions for a bumper year of tonic sales. When you add to this the progress that Fevertree made in the US during lockdowns and the huge on-trade (bars and hotels) market that they are now looking to target, the future looks crisp and fizzy for Fevertree. We have been happily adding to shares at these levels.

We certainly cannot tell you when the current bout of market volatility will come to an end, but we are confident that the clouds will part and, in the meantime, are sticking to our knitting and focusing on our core quality holdings. These businesses are best placed to survive and grow through even the toughest market conditions.


The above article has been prepared for investment professionals. Any other readers should note this content does not constitute advice or a solicitation to buy, sell, or hold any investment. We strongly recommend speaking to an investment adviser before taking any action based on the information contained in this article.

Please also note the value of investments and the income you get from them may fall as well as rise, and there is no certainty that you will get back the amount of your original investment. You should also be aware that past performance may not be a reliable guide to future performance.

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