Meet The Manager - Neil Hermon

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 – December 2011

The UK equity market was marginally up in December. The continuing crisis in the eurozone and the threat of global recession continued to affect investor confidence. However, equity valuations do appear good value and compare well to other asset classes. Additionally, the corporate sector is in a strong financial position with balance sheets in good order. The FTSE All-Share Total Return Index rose 0.8%, with small and mid-caps underperforming, as the Hoare Govett Smaller Companies ex-Investment Companies Index declined 1.8%.

Positive contributors to portfolio performance included NCC (escrow and information security assurance services), which rose 22.8% as the company gave an upbeat trading statement and analysts raised their profit expectations for the year. Ashtead (plant hire in the USA and UK) rose 22.5%, as the company announced very strong interim results and upgraded their guidance for the year on the back of strong growth in the US. NCC (internet gaming software and services) rose 18.7% as the Department of Justice gave a favourable ruling, potentially opening the US market to the introduction of internet gaming. Less helpfully, Northgate (commercial vehicle rental) fell 20.5% after the company reported dull results and warned over difficult trading conditions in Europe.

We increased our position in Perform (exploitation of digital sports rights) as we believe the company is set for strong growth in 2012. We reduced our position in Persimmon (UK housebuilder) as the shares were strong performers in 2011 and we feel the upside is now more limited.