The Fund enjoyed another good month in April, comfortably outperforming its IA UK All Companies benchmark, helped to some extent by its small and mid-cap bias, with those segments outperforming large caps as some of the more defensive large cap sectors got left behind in the rising market. Newsflow from portfolio companies was generally supportive with the outperformance driven by a wide selection of holdings. The stand-out contributor was JTC, the Fund, Corporate and Private Wealth administration group, which having sold off heavily in Q1 2019 rallied strongly on the back of reassuring results and outlook comments.
During the month we continued to build up several of the Fund’s existing holdings such as Euromoney, Elementis, SThree and Volution, where we felt the valuations were attractive. We started a holding in Learning Technology Group (LTG), an acquisitive B2B online training business. Having followed LTG for several years, we took advantage of recent share price weakness which had brought the valuation down to what we felt was an interesting level. We took the top off a number of holdings where strong performance had started to stretch valuations, namely Boku, dotDigital and Oxford Metrics Group. Finally, we sold out of Spectris on valuation grounds and exited Gama Aviation which had proved to be a disappointing investment after a number of profit warnings, on the back of weak trading, and accounting issues which undermined investor confidence in the shares, with no immediate resolution of its problems in sight.
The market, having continued to rally strongly in April, seemingly oblivious to the unresolved issues of BREXIT and trade wars, received a timely shock with Trump’s recent escalation of the trade dispute with China, which caused a renewed bout of market jitters over the risks to economic growth and a return of volatility. At the same time the equity tap has been turned back on with a pick-up in the number of IPOs and fund raisings. The combination of these issues may well cause the market to pause for breath over the summer.