Meet The Manager

Neil Hermon has managed the portfolio since November 2002, and his experience of managing UK Smaller Companies funds dates back to 1994. Neil was previously Head of Smaller Companies at Morley, where he managed the Norwich Union UK Smaller Companies OEIC (AA rated by S&P fund research). He describes his investment style as stock-picking with a growth bias.

Fund Manager's Commentary – April 2012

The UK equity market ended April marginally down. Macroeconomics were very much back in investors minds, particularly concerning the Eurozone. The Spanish economy continued to decline, with its credit rating again downgraded by Standard & Poor’s and the unemployment rate hitting nearly 25%. The Spanish stock market fell 15%. Additionally, political risks rose during the month, with the Dutch government collapsing and the real possibility of a left-leaning French President; this became reality as François Hollande has now become the first Socialist president since 1988. The FTSE All-Share Total Return Index fell 0.3%, with small and mid caps underperforming; the Hoare Govett Smaller Companies ex-Investment Companies Index fell 0.8%.

Positive contributors to performance included E2V Technologies (sensors and tubes manufacturer), which rose 19.4% as the company issued a positive trading statement and raised their full-year profit expectations. Laird (electric actuators and fluid power) rose 8.9%, as investors focused on the positive prospects for its end markets. Less helpfully, Carphone Warehouse (mobile phone retailer) fell 12.7% as brokers downgraded profit expectations following increased competition in France and weak pre-pay phone sales across Europe.

We increased our position in RPS (energy services and planning consultants) as the company appears well-placed to benefit from the growth in oil and gas exploration and a bounce-back in its Australian planning market. We also increased our position in Afren (oil and gas producer and explorer) as the company made a significant discovery in Kurdistan. To fund these purchases we sold our position in Carillion (international contractor and support services group), as we are concerned that a lack of growth in its support services division and falling margins in its contracting operations will put pressure on profit expectations.