Quality small cap focus

Strategic Equity Capital (SEC’s) managers believe the current portfolio consists of very high quality smaller companies. The high cash balances that built up in 2016, on the back of events such as the e2v technologies takeover, have, largely, been redeployed. Cash drag and the fund’s focus have held back returns over the past year (see page 12). However, investment activity (detailed on page 10) has generated encouraging initial returns. Longer term, the detailed private equity derived process, focus on high quality small companies and positioning of holdings in long term structural growth areas provide the managers with confidence for the future. The team acquired a significant number of shares earlier in the year and a programme of share buybacks, operating since April 2017, appears to have stabilised the discount.

Focused UK small companies portfolio

SEC aims to achieve absolute returns over a medium-term period, principally through capital growth. SEC is managed with a focused portfolio of investments selected on the same basis that a private equity investor would use to appraise its investments.