The Fund ended what was a volatile year for UK-listed smaller companies in positive fashion, up 17.9% in 2021.

Our best performing investments over the twelve months were Liontrust Asset Management, Greggs (of sausage rolls fame) and Somero, the US manufacturer of construction machinery, namely screeds used in levelling concrete floors. Honourable mentions also go to the UK’s leading self-storage company, Big Yellow Group, and Diploma, the global distributor of ‘mission-critical’ components, such as seals on a pipeline or seatbelts for fighter jets.

In the final quarter we made two new investments, in Swedish private equity investor VNV Global and London-based broker Peel Hunt. The majority of our new money, however, was put to work adding to existing positions as and when these often fickle markets offered up opportunities. As investors worried about higher interest rates in December, the share price of higher growth names in our portfolio, such as Ideagen, Softcat and Fevertree Drinks, took a hit and we were happy to steadily add to all of these names. Higher rates may well cause short-term share price volatility, but this does nothing to change the business fundamentals and exciting prospects ahead for each of these businesses.

We exited our position in Avon Protection after a short but eventful investment period. We initiated a small holding in Avon, the leading supplier of gas masks to the US Army, at the end of 2020, after the share price had taken a hit on the back of a contract delay. We believed that the core business remained strong at the time, but it subsequently became apparent to us that the issues ran deeper than this one contract and so we cut our position.

Our top ten holdings remain largely unchanged, reflecting our long-term investment horizon and the fact that these businesses continue to grow steadily, generate lots of cash and are reinvesting for the future.


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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