| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 9.7% | -0.1% | 2.4% |
| 2025 | 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|---|
| 2.4% | 4.2% | 3.2% | -29.2% | 22.8% |
The UK Smaller Companies Fund returned -0.09% in Q4 2025, underperforming the index return of 2.21%. Defence companies Qinetic and Chemring were key detractors as share prices fell amid potential Russia-Ukraine peace agreement news and delays in government Defence Investment Plan publication. Positive contributors included housebuilder Bellway and construction company Balfour Beatty, which benefited from the benign UK budget outcome and strong operational performance. The managers initiated a position in facilities management company Mitie and continued building their position in veterinary services provider CVS, while taking profits in several holdings including Cohort and ME Group. Despite ongoing geopolitical challenges and uncertainty around interest rate cuts, the managers believe UK small-cap valuations remain attractive and well below long-term averages. The portfolio is positioned to withstand current challenging conditions while participating in any economic upswing, with persistent M&A activity suggesting market recognition of undervaluation. The managers emphasize selectivity based on franchise strength, market positioning and balance sheet quality.
UK smaller companies offer attractive value opportunities despite near-term uncertainty, with the portfolio positioned to benefit from potential economic recovery while maintaining defensive characteristics.
Although uncertainty remains around short-term economic conditions, we think the portfolio is both well-positioned to withstand the current challenging environment and participate in any potential upswing. The significant movements in equity prices have thrown up some fantastic buying opportunities. However, we believe it is important to be selective as the strength of franchise, market positioning and balance sheets will likely determine the winners from the losers.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 16 2026 | 2025 Q4 | BBY.L, BWY.L, CHG.L, CVSG.L, DOM.L, MTO.L, OSB.L, QQ.L | Construction, defense, Government Policy, small caps, Uk, Valuations | - | Defence companies Qinetic and Chemring were key detractors as share prices fell amid news of potential peace agreement between Russia and Ukraine. UK defence contractors are waiting for publication of government's Defence Investment Plan, which is slowing decision making. Housebuilder Bellway and construction company Balfour Beatty were positive contributors. Bellway rallied following benign UK budget outcome and reported encouraging preliminary full-year results. Balfour Beatty continued to rally on strong order-book momentum and cash generation. UK smaller companies experienced challenging conditions with government handling of Autumn Budget destroying corporate and consumer confidence. However, valuations remain attractive and sit well below long-term averages, with persistent M&A activity suggesting market players are taking notice. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
ConstructionCTR Holdings builds structural frames and handles finishing work in Singapore, primarily on public projects. The Singaporean government provides stable cash flows through reliable payment terms. The company had significant net cash position and substantial signed project backlog when purchased. |
Public Projects Singapore Cash Flow Backlog |
DefenseThe team initiated a position in Curtiss-Wright, believing the company is entering a period where multiple near-term growth drivers are converging, including rising defense budgets, commercial aerospace production ramps, nuclear power plant life extensions and new builds, and submarine production. |
Defense Budgets Aerospace Nuclear Submarines | |
United KingdomUK smaller companies experienced challenging conditions with government handling of Autumn Budget destroying corporate and consumer confidence. However, valuations remain attractive and sit well below long-term averages, with persistent M&A activity suggesting market players are taking notice. |
Small Caps Valuations Government Policy M&A |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| No Elevator Pitches found | ||||||||||
| TICKER | COMMENTARY |
|---|---|
| BBY.L | Key positive contributors included housebuilder Bellway, construction company Balfour Beatty and challenger bank OSB. Balfour Beatty's share price continued to rally following the confirmation of strong order-book momentum and cash generation. |
| BWY.L | Key positive contributors included housebuilder Bellway, construction company Balfour Beatty and challenger bank OSB. Bellway's share price rallied, alongside UK domestic companies, following the benign outcome of the UK budget. Bellway also reported an encouraging set of preliminary full-year results. |
| CHG.L | Key detractors from performance were defence companies Qinetic and Chemring, and video games developer Everplay. Both Qinetic and Chemring saw their share prices fall amid news of a potential peace agreement between Russia and Ukraine. UK defence contractors are also waiting for the publication of the government's Defence Investment Plan, which is slowing decision making. For Chemring, there was also disappointment around a capital expenditure (capex) overspend on its build-out in Norway. |
| CVSG.L | We also continued to build the position in the veterinary services provider CVS, where we see attractive opportunities driven by the technical overhang as the shares move to from AIM listing to the main market. |
| DOM.L | We also closed the holdings in Domino's Pizza and publishing company Future due to changing market conditions. |
| MTO.L | We initiated a position in Mitie, a facilities management business. Our investment thesis is based on the potential the group can continue to grow organically through its record order pipeline, improve margins as it pivots towards higher-margin business units, and continue to return capital to shareholders through share buybacks. |
| OSB.L | Key positive contributors included housebuilder Bellway, construction company Balfour Beatty and challenger bank OSB. Shares in OSB rose due to confirmation that the bank was entering a more favorable capital regime, which is expected to enhance cash returns to shareholders. |
| QQ.L | Key detractors from performance were defence companies Qinetic and Chemring, and video games developer Everplay. Both Qinetic and Chemring saw their share prices fall amid news of a potential peace agreement between Russia and Ukraine. UK defence contractors are also waiting for the publication of the government's Defence Investment Plan, which is slowing decision making. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
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| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
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| No industry data available | |||
