SVM UK Emerging hit by ‘painful period for growth investors’ – SVM UK Emerging (SVM) has posted its annual results for the year to 31 March 2022. During the period, its net asset value fell 10.0% to 112.51p per share, compared to a return of 5.4% in its comparator index, the IA UK All Companies Sector Average Index.
The team said it has been a painful period for growth investors, with stockmarket interest focusing on companies perceived as beneficiaries of inflation. Many growth companies delivered good results but their shares were de-rated. The invasion of Ukraine put upward pressure on the prices of commodities and energy and related sectors outperformed but SVM has low exposure to them. It said this market pattern was the primary reason for portfolio underperfomance during the year under review.
Looking ahead, economic overheating seems likely to lead, in the short term, to higher UK interest rates, but action by the Bank of England and a squeeze on real incomes are likely in time to cool the economy. In the medium and longer term disinflationary pressures may reassert. A recession in the UK and elsewhere is likely to emerge in the coming year but it may be relatively short.
The strongest contributions to performance over the period were from Watches of Switzerland, Kape Technologies, Alpha FX, Kin and Carter and 4 Imprint Group. Laggards included Ceres Power, JD Sports Fashion, Essensys, Flutter Entertainment and ASOS.
Additional investment was made in Londonmetric, Kooth, Ideagen, Kape Technologies and Marlowe. To fund these purchases, Ocado, Parsley Box, Restaurant Group, The Hut Group, Just Eat Takeaway, Molten Ventures and Moonpig were sold.
SVM : SVM UK Emerging hit by ‘painful period for growth investors’
Underperformed its benchmark over 10 years, ongoing charges of 2.6% and shareholders’ funds of just £6.7m at end March – why is the board persevering with this failed trust?