Fund Objective

The aim of the fund is to achieve capital growth.

View on Past Performance

In September, the HGSC Index (ex-IC) fell by 14.8% on a total return basis, reflecting the turmoil in global financial markets.Stock selection supported performance. Positives included the insurer Beazley Group and the retailer N Brown. We had a large holding in Detica and its takeover by BAE Systems prevented it from falling with the rest of the market. However, large positions in the electronics stocks Laird, Chloride and Spectris detracted. Oil stocks Hunting, Salamander, Premier Oil and Wellstream also proved negative.We invested in three consumer-facing stocks - Marshalls (which supplies stone for patios), the retailer Mothercare and the consumer loan firm Cattles - thus reducing our underweight in consumer sectors. We trimmed our positions in the industrial stocks Domino Printing and Bodycote, and in the consultant engineer WSP.

Future Expectations

The economic environment is unhelpful for smaller companies but takeover activity should support valuations. Further interest rate cuts would help sentiment and may occur towards the end of the year or in early 2009.

Fund Details