After a rough start to the year in January with rising interest rates and inflation, February has taken on a new and truly appalling dimension.

Global markets (and ourselves) did not expect a full-scale invasion of Ukraine, believing that Putin was aiming instead to create enough tension to gain concessions. President Putin’s actions and rhetoric have caused untold misery to millions in Ukraine and will have bought severe consequences to his own people. Our thoughts are with all those in Ukraine and with family there.

Already jittery 2022 markets felt at times towards the end of February like they had moved into full panic mode. On the day of Putin’s invasion (24 February 2022), the FTSE 100 fell 3.9%, volatility not seen since the worst of the COVID-19 sell-off in 2020. For this fund we focus on businesses with a market capitalisation between £250 million and £2 billion, which predominantly leads us to the FTSE 250, Small Cap and AIM indices. The performance of these indices in 2022 reflects widespread pessimism and general fear in markets:

  • FTSE 250: -18.2%
  • FTSE Small Cap: -14.4%
  • FTSE AIM: -20.8%

During these times of worry, it is not surprising to see shares in smaller businesses hit hardest, but here lies the opportunity for us as active investors. This is one of those unusual times where widespread market fear gives long-term investors time to build up positions in businesses that rarely trade on such low valuations.

Margaret Thatcher famously stated:

              ‘I am not a consensus politician. I'm a conviction politician’ – Margaret Thatcher, 1979

These are markets for us to be conviction investors on behalf of our clients and to put their savings to work, as and when opportunities arise. During February we continued to add to our investments in Fevertree Drinks (who need no introduction) and Keywords Studios, who are a one-stop-shop for outsourced video game development. Both are high growth, high quality businesses that we have been steadily adding to over recent months.

We also added two new investments to the Fund in the Healthcare sector. This sector has yo-yoed from hero (in 2020) to near zero now, with sharp sell-offs across the board. The indiscriminate selling allowed for us to purchase Ergomed shares a third lower than where they began 2022 and Renalytix down a mere 66% on last summer. Ergomed specialise in outsourced critical services for the pharmaceutical industry, such as managing clinical trials or ongoing monitoring of drug performance post-approval. They have an excellent long-term growth record and the founder and CEO still owns 22% of the business. Renalytix are in the process of commercialising a new diagnostics platform that focuses on kidney disease, a tragically underserved disease area. All being well, we hope to be shareholders in both businesses for many years to come.


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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