STOCKS | FUNDS | INVESTMENT TRUSTS | PENSIONS AND SAVINGS

VOL 20 / ISSUE 19 / 17 MAY 2018 / £4.49 SHARES WE MAKE INVESTING EASIER

14.6% 13.7% 12.7%

12.2% 10.7%

COULD YOU GET THREE 6% YIELD INVESTMENT TRUSTS FROM ROYAL BANK TO PLAY THE OF SCOTLAND? RISING OIL PRICE

EARLY RETIREMENT: IS IT POSSIBLE ANYMORE? SCOTTISHTHE MONKSMORTGAGE INVESTMENT INVESTMENT TRUST TRUST PLC

MONKS HAS OVER £1.5BN IN NET ASSETS UNDER MANAGEMENT, WHILE ITS ONGOING CHARGE IS A MODEST 0.59%*.

THE KEY TO A WELL TUNED PORTFOLIO.

Monks Investment Trust, we believe, could be a core investment for anyone seeking long-term growth. It is managed according to Baillie Gifford’s £33bn Global Alpha strategy. As a result, Monks takes a highly active approach to investment and its portfolio looks nothing like the index. The managers group their holdings into four different growth categories – stalwart, rapid, cyclical and latent. This allows for excellent diversifi cation and offers the chance to unearth some of the more interesting companies listed on global stock markets.

Please remember that changing stock market conditions and currency exchange rates will affect the value of the investment in the fund and any income from it. Investors may not get back the amount invested. If in doubt, please seek fi nancial advice.

If you’re looking for a fund to shine at the centre of your portfolio, call 0800 917 2112 or visit www.monksinvestmenttrust.co.uk A Key Information Document is available by contacting us. Long-term investment partners

*Ongoing charges as at 30.04.17. All other data as at 31.03.18. Your call may be recorded for training or monitoring purposes. Monks Investment Trust PLC is available through the Baillie Gifford Investment Trust Share Plan and the Investment Trust ISA, which are managed by Baillie Gifford Savings Management Limited (BGSM). BGSM is an affi liate of Baillie Gifford & Co Limited, which is the manager and secretary of Monks Investment Trust PLC. EDITOR’S VIEW ZPG bid highlights appeal of digital platform businesses Look for companies embracing technology to make customers’ lives easier

oopla’s parent company ZPG property portal market and executing its (ZPG) was an obvious takeover growth plan with considerable success. Z target and we aren’t surprised to Key to its achievements is the use see it receive a 490p per share bid from of digital channels to easily reach US private equity firm Silver Lake. consumers. That’s also been a real Congratulations if you owned its driving force for many other companies shares before the takeover news was on the stock market including Just Eat announced. And hopefully you did own (JE.), Purplebricks (PURP:AIM) and them, given that ZPG was one of the six Rightmove (RMV). quality stocks we said to buy in the 15 ‘The tech platform model is a special February 2018 issue of Shares following kind of beast: utilising the network the global market sell-off. We said to snap up the effect, automation, and operational leverage to shares at 328.4p, meaning you could have made push towards the winner taking all in the long run, nearly 50% profit in three months if you followed a process that can be accelerated by M&A,’ says our suggestion. stockbroker Peel Hunt. Even if you aren’t celebrating, there are still ‘In the CMA’s decision regarding Just Eat’s important lessons to be learned from the takeover acquisition of Hungryhouse, it described how the situation and the importance of other companies platforms: “offer consumers the convenience of with similar characteristics. choosing from a large range of takeaway providers in one place”. Just replace “takeaway” with car MAKING LIFE EASIER dealers, insurance brokers or jobs.’ ZPG will be the latest company in Silver Lake’s Peel Hunt says that when you are tapping portfolio that uses technology to make customers’ the same broad set of consumer needs via a lives easier. marketplace model, scale efficiencies in tech and Over the past three years ZPG has expanded marketing can easily be made. into the utilities switching market through the Asset manager Lindsell Train believes its best purchase of uSwitch and also developed broader portfolio performers will be companies making propositions in the property and financial services a success of a digital transition or where digital is market. ‘clearly a friend’ to the company. Relevant examples Everything was linked by its goal to help include Euromoney (ERM) and RELX (REL). consumers make smarter property and household decisions. SELECTIVE INVESTING It’s no wonder that ZPG tried to buy Many investors have been put off online platform GoCompare (GOCO) late last year as that businesses due to high equity ratings. And we would have strengthened its position in financial think it is right that there is some scepticism about services, particularly insurance. Although that some of the companies in this market as not bid was rejected, there is now speculation that everyone will be a long-term winner. For example, Silver Lake could acquire GoCompare itself and Purplebricks is arguably trying to do too much at bolt it on to ZPG. once and has considerable execution risk. Yet there is a good argument to suggest some EMBRACING THE DIGITAL CHANNEL of digital players deserve a premium rating if ZPG has been expanding its product lines, holding they have an edge over rivals and the potential up well against increased competition in the to outperform. (DC)

17 May 2018 | SHARES | 3 USING THE Contents PDF VERSION? CLICK ON PAGE NUMBERS TO JUMP 17 May 2018 TO THE RELEVANT STORY

EDITOR’S VIEW 03 ZPG bid highlights 18 appeal of digital platform businesses

BIG NEWS 06 Could you get 6% yield from Royal Bank of Scotland?

BIG NEWS 07 In vestors exit emerging markets funds STORY IN NUMBERS GREAT IDEAS 10 BT and other stories 12 Bu y Auto Trader BIG NEWS in numbers as the market 07 Is investor excitement has completely over US gambling misunderstood breakthrough its situation premature? 10 GREAT IDEAS BIG NEWS 14 Red tape is no 08 CYBG refuses to barrier for Ideagen’s elaborate on Virgin growth ambitions Money approach GREAT IDEAS UPDATES BIG NEWS 16 We update on XP 08 Anglin g Direct is Power and Avesoro a good catch in the retail sector MAIN FEATURE 18 10 funds that outperform again and again

securities, derivatives or positions with spread betting organisations that they have an interest in should first clear their writing with the editor. If the editor DISCLAIMER agrees that the reporter can write about the interest, it should be disclosed to readers at the end of the story. Holdings by third parties including families, trusts, IMPORTANT self-select pension funds, self select ISAs and PEPs and nominee accounts are included in such interests. Shares publishes information and ideas which are of interest to investors. It does not provide advice in relation to investments or any other financial matters. 2. Reporters will inform the editor on any occasion that they transact shares, Comments published in Shares must not be relied upon by readers when they derivatives or spread betting positions. This will overcome situations when the make their investment decisions. Investors who require advice should consult a interests they are considering might conflict with reports by other writers in the properly qualified independent adviser. Shares, its staff and AJ Bell Media Limited magazine. This notification should be confirmed by e-mail. do not, under any circumstances, accept liability for losses suffered by readers as a result of their investment decisions. 3. Reporters are required to hold a full personal interest register. The whereabouts of this register should be revealed to the editor. Members of staff of Shares may hold shares in companies mentioned in the magazine. This could create a conflict of interests. Where such a conflict exists it 4. A reporter should not have made a transaction of shares, derivatives or spread will be disclosed. Shares adheres to a strict code of conduct for reporters, as betting positions for seven working days before the publication of an article that set out below. mentions such interest. Reporters who have an interest in a company they have written about should not transact the shares within seven working days after the 1. In keeping with the existing practice, reporters who intend to write about any on-sale date of the magazine.

4 | SHARES | 17 May 2018 Contents

EDUCATION 39 H ow a stock’s 36 liquidity can affect your returns

LARGER COMPANIES 40 Why Provident Financial shares are still erratic

SMALLER COMPANIES 41 Vertu’s shares look really cheap given its very strong asset backing

SMALLER COMPANIES INVESTMENT TRUSTS MONEY MATTERS 42 Next Fifteen’s 26  Three investment 36 Is an early retirement superior performance trusts to play the possible anymore? still has legs rising oil price MONEY MATTERS WEEK AHEAD INVESTMENT TRUSTS 38 H ow young savers 44 Financial results and 27  Investment can bridge the ex-dividends over trusts exposed to intergenerational the coming week Argentina’s inflation, divide currency and interest INDEX rate problems 45 In dex of companies and funds in this issue FUNDS 38 29 The micro cap fund streets ahead of its peers

AEQUITAS 32 Four lessons to draw from the year so far

WHO WE ARE BROKER RATINGS EXPLAINED: EDITOR: DEPUTY NEWS Daniel EDITOR: EDITOR: We use traffic light symbols in the magazine to illustrate Coatsworth Tom Sieber Steven Frazer broker views on stocks. @SharesMagDan @SharesMagTom @SharesMagSteve FUNDS AND REPORTER: REPORTER: CONTRIBUTORS Green means buy, Orange means hold, Red means sell. INVESTMENT TRUSTS David Stevenson Lisa-Marie Janes Emily Perryman EDITOR: @SharesMagDavid @SharesMagLisaMJ Tom Selby James Crux The numbers refer to how many different brokers have @SharesMagJames that rating.

MANAGING DIRECTOR PRODUCTION ADVERTISING Eg: 4 2 1 means four brokers have buy ratings, Mike Boydell Head of Design Senior Sales Executive Rebecca Bodi Nick Frankland two brokers have hold ratings and one broker has a sell 020 7378 4592 rating. CONTACT US: Designer [email protected] [email protected] Darren Rapley The traffic light system gives an illustration of market views Shares magazine is published weekly every Thursday (50 times per year) by AJ Bell Media Limited, but isn’t always a fully comprehensive list of ratings as some 49 Southwark Bridge Road, London, SE1 9HH. Company Registration No: 3733852. banks/stockbrokers don’t publicly release this information. All Shares material is copyright. Repro­duction in whole or part is not permitted without written permission from the editor.

17 May 2018 | SHARES | 5 BIG NEWS Could you get 6% yield from Royal Bank of Scotland? The bank is expected to pay its first dividend since 2008

here is growing speculation that Royal Bank DIVIDEND PER SHARE of Scotland (RBS) will soon pay its first 20 17.99p Tdividend since 2008 and rejoin its UK-quoted banking peers as an income stock. 15 A $4.9bn settlement with the US Department 11.13p of Justice (DoJ) over mis-selling mortgage-backed 10 securities from 2005 to 2007 effectively signals 6.17p the end of a nasty period of fines. The amount 5 is also less than expected, prompting analysts to 0 consider the potential for generous capital returns 2018 2019 2020 to shareholders. Source: Reuters RBS used to be a 3% to 4% yielding stock, as Government having around a 71% stake in the illustrated by the accompanying chart which shows bank. Chancellor Philip Hammond intends to sell its yield in the five years before the credit crunch. a £3bn stake in the bank this financial year and

ROYAL BANK OF SCOTLAND – DIVIDEND YIELD further stake sales could weigh on the share price 5.00 near-term. 4.50 Hoffman adds that RBS still has to put through a 4.00 lot of restructuring which ‘needs to happen’. The

3.50 bank is aiming to focus on its retail and commercial offering which will involve asset disposals as well as 3.00 a cost reduction plan. 2.50

2.00 Source: Thomson Reuters Datastream INSTITUTIONAL INTEREST 2002 2003 2004 2005 2006 With RBS looking set to start paying dividends after Consensus forecasts published on Reuters show a 10-year hiatus, equity income fund managers may that analysts expect a 6.17p dividend in 2018, rising now be interested in the stock. to 11.13p in 2019 and 17.99p in 2020. On the latter For a bank that has clocked up almost £21bn in basis, the shares are currently trading on a 6.1% fines since 2011, the removal of the looming fine prospective yield. from the DoJ is a positive for investors. Indeed, its We don’t believe that RBS will become a 6% chief executive Ross McEwan says the move makes yielding stock long-term; instead we believe the the investment case for the bank ‘much clearer’. (DS) share price could trade higher by 2020 and so it would have a lower yield based on the market price DIVIDEND YIELD in two years’ time, potentially at the 4% level. 6.10% Phil Hoffman, head of the UK, Middle East and Africa for Pzena Investments, invested in RBS before any resolution of the aforementioned 3.80% misconduct issue was on the cards. His reasoning 2.10% was that beyond the potentially large fine, fundamentally RBS was a good business. He does warn that RBS has a ‘long way to go’; 2018 2019 2020 for instance, it’s still largely state owned with the Source: Reuters, Consensus forecasts based on latest share price

6 | SHARES | 17 May 2018 BIGBIG NEWSNEWS Investors exit emerging markets funds Outflows driven by ETFs with Russia out in the cold

ata from investment bank UBS shows LATEST WEEKLY OUTFLOWS FROM EM EQUITY FUNDS emerging markets funds saw the second- Dbiggest weekly outflow since 2016 in the week to 9 May. This breaks a run of 11 weeks of inflows which has attracted $26.6bn into emerging market equities in the wake of the global market correction in February. Around 97% of the outflows were linked to exchange-traded funds. UBS notes ‘this fund type has been the major driver of inflows into emerging market equity funds through the current market cycle’. There were particularly significant outflows individuals which are seen as being tied to Russian for Russia which saw its biggest weekly outflow in president Vladimir Putin. 14 months at $224m. This has left Russia a less ‘crowded’ trade Russia is being hit by US sanctions amid rising according to UBS. This might interest contrarian political tensions with the West. For the first investors given the country is a potential time the US is directly targeting companies and beneficiary of the recent surge in oil prices.

CYBG refuses to elaborate on Virgin Money approach Mixed opinion on whether it is offering enough

THE CHIEF financial officer of 1.1297 new CYBG shares multiple on a price to tangible of CYBG (CYBG) has refused for each Virgin Money share. book value metric. This is to comment on the bank’s That works out as a 15% bid much less than the 2.3-times takeover approach for Virgin premium to the closing price book value rating enjoyed Money (VM.), revealed on before the announcement. by Shawbrook and 1.8-times 7 May. Investment bank Berenberg for Aldermore when they Speaking to Shares at its half believes the proposed terms were acquired. year results on 15 May, Ian are attractive, saying Virgin CYBG has until 5pm on 4 Smith wouldn’t be drawn into needs to do a deal of some June to say if it intends to make discussion on any element of sorts because its growth a firm offer or not. The two the approach. opportunities are limited as a companies are seen as a good Virgin has yet to formally standalone business due to its fit as they have complementary respond to takeover interest costly deposit base. products. CYBG previous tried but some analysts reckon CYBG Jefferies, another investment to buy Royal Bank of Scotland will have to pay significantly bank, says the current proposal (RBS) subsidiary Williams & more than the current proposal implies a 1.2-times takeout Glyn. (DC/DS)

17 May 2018 | SHARES | 7 BIG NEWS Is investor excitement over US gambling breakthrough premature? Taxes, regulatory requirements and competition could all be obstacles for UK firms looking to capitalise on stateside opportunity

hares in several UK betting stocks are enjoying Sportech (SPO), GVC (GVC), Paddy Power Betfair a rare moment in the sun as a court ruling (PPB) and Webis (WEB:AIM) all enjoyed healthy Sopens the door for sports betting to be share price gains in the immediate aftermath of the legalised in multiple US states. news on 14 May. However, some observers are warning the The landmark ruling from the US Supreme Court market not to get carried away with the news. could lead to US states legalising betting on college Broker Davy cautions against ‘assuming too big a and professional sports. prize too soon’. The court ruling struck down a federal law that ‘The shape of a regulated landscape is yet to required states to ban gambling on sports events. be determined, with many undecided variables It could pave the way for legal sports betting in ultimately dictating the size of the opportunity,’ numerous sates rather than in select places such it adds. as Nevada. Allowing sports betting could be a UBS points out several concerns over lucrative source of tax income for states. competition, the possible burdensome The news represents a dramatic turnaround requirements facing operators and the level for many UK-quoted gambling stocks which had of taxation. previously experienced setbacks with the opening Nevertheless William Hill (WMH), 888 (888), up of the US gambling sector. (DC/TS)

Angling Direct is a good catch in the retail sector Flourishing fishing tackle specialist represents a rare retail success story

FISHING TACKLE RETAILER strong, up 54% to £16.1m. scope for significant organic and Angling Direct (ANG:AIM) has Stockbroker Cenkos has acquisitive gains in the future. reported better than expected upgraded its year to 31 January Excitingly, Angling Direct sales in the year to 31 January 2019 revenue estimate by 3% is looking to grow online 2018 at £30.2m, a 44% increase to £41.3m. Analyst Tom Callan in Germany, where it has year-on-year. predicts 22% growth in adjusted just launched a dedicated This was driven by new store pre-tax profit to £1.1m in the website, as well as France openings and acquisitions, new financial year, rising to and the Benelux, all of which robust like-for-like store sales £1.4m in the following year. have large angling markets. growth of 9% and the benefits Angling Direct still has but a Management also believe of e-commerce investment. minimal share of the UK fishing Russia offers compelling Online sales were also very tackle market, meaning there is opportunities too. (JC)

8 | SHARES | 17 May 2018 We strive to go deeper.

Murray Income Trust ISA and Share Plan Investing for income growth is a skill. Sometimes, an investment that seems great on paper may not be so good when you look beneath the surface. Murray Income Trust searches for high-quality income opportunities by getting to know in depth every company in whose shares we invest. We meet management face-to- face. We ask tough questions – and we only invest when we get to the bottom of how a business works. So when we include a company in Murray Income Trust, you can be sure we’ve done the legwork. Please remember, the value of shares and the income from them can go down as well as up and you may get back less than the amount invested. No recommendation is made, positive or otherwise, regarding the ISA and Share Plan. The value of tax benefits depends on individual circumstances and the favourable tax treatment for ISAs may not be maintained. We recommend you seek financial advice prior to making an investment decision.

Request a brochure: 0808 500 4000 murray-income.co.uk

Aberdeen Standard Investments is a brand of the investment businesses of Aberdeen Asset Management and Standard Life Investments. Issued by Aberdeen Asset Managers Limited, 10 Queen’s Terrace, Aberdeen AB10 1YG, which is authorised and regulated by the Financial Conduct Authority in the UK. Telephone calls may be recorded. aberdeen-asset.co.uk STORY IN NUMBERS

MELROSE TO ADDRESS BT EXCESSIVE PAY CONCERNS ITS HOSTILE TAKEOVER significant shareholder of high profile business revolt, with more than 20% PAYOUTS TALLY GKN (GKN) is shining a of shareholders voting WITH PENSION harsher light on corporate against the remuneration FUNDING GAP governance and executive report. pay at industrial buyout firm GROWTH Melrose Industries (MRO). Ahead of its AGM on THE FUNDING GAP of BT’s 10 May the company had (BT.A) pension scheme soared pledged to review executive during its latest three-year pay but the £42m doled out assessment period. to its four top executives Between June 2014 and for 2017 prompted a June 2017 liabilities shot up from £47.2bn to £60.4bn, or a £13.2bn increase. That compares with growth in assets of £8.9bn (from £40.2bn to £49.1bn). Interestingly, US RETAIL BEHEMOTH Walmart is the £4.3bn paying $16bn for an initial 77% stake difference Walmart in Indian e-commerce company between asset Flipkart, its largest ever deal as it and liabilities looks to battle Jeff Bezos’ Amazon growth during flips out in one of the world’s largest and the period tallies fastest growing economies. almost exactly Flipkart, which sells everything with the £4.2bn over from electronics and smartphones of dividends to clothing, gives Walmart a partner BT paid out to in one of the world’s most attractive shareholders Flipkart retail markets. during the The remainder of Flipkart will same spell. be held by existing shareholders BT has frozen including co-founder Binny Bansal, dividends at Tencent, Microsoft and Tiger Global 15.4p per share Management, which Walmart sees for the foreseeable as ‘key strategic and technology future. (SF) partners’. Flipkart offers over 80m products across more than 80 categories. Little wonder then that Amazon expressed interest in making a competing offer.

10 | SHARES | 17 May 2018 Limited, Henderson GlobalInvestors (BrandManagement) SarlandJanusInternational HoldingLLC. Financial ConductAuthority toprovide investment products andservices. Telephone calls mayberecorded and monitored. ©2017, JanusHenderson Investors. The nameJanusHenderson Investors includesHGIGroup 2606646), Gartmore Investment Limited(reg. no. 1508030), (eachincorporatedand registered inEngland andWales with registered officeat201 Bishopsgate, LondonEC2M3AE) are authorisedand regulated bythe Henderson Investment FundsLimited (reg. no. 2678531), HendersonInvestment ManagementLimited(reg. no. 1795354), AlphaGenCapitalLimited(reg. no. 962757), Henderson EquityPartners Limited(reg. no. Issued in the UKby Janus Henderson Investors. Janus Henderson Investors isthe name under which JanusCapital International Limited (reg no. 3594615), Henderson Global Investors Limited (reg. no. 906355), For promotional purposes Janus Henderson financial goals. your long-term exists tohelp you achieve

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H034018/0218 GREAT IDEAS Buy Auto Trader as the market has completely misunderstood its situation Its shares trade at an unjustified discount to other internet-based businesses

eak sentiment towards on its website). This therefore the car market XXXXAUTO TRADER BUY  BUY spooked the investment should not obscure (xxx)(AUTO) xxxp 377.7p community and prompted W Stop loss: xxp300p the strength of vehicle listings weakness in the share price. website Auto Trader (AUTO). Market value: xxx£3.6bn There are two points Enjoying the low costs of being to consider here. First the a purely internet-based business company has other levers and the pricing power associated businesses in the US. It is it can pull to grow average with its status as the runaway also roughly in line with the revenue per retailer (ARPR). leader in the UK market, we think consensus 2018 EV/EBITDA Second it is worth noting the investors should take advantage multiple for Zoopla’s main rival aforementioned higher rated of recent share price weakness and UK property site market property portals serve a housing before the market reappraises leader Rightmove (RMV) at market which also has slightly the investment case. around 23-times. By contrast uneven and uncertain prospects. A near-term catalyst is on Auto Trader currently trades on Property market volatility the horizon in the form of a 7 an EV/EBITDA of 15.85-times. has not stopped Rightmove’s June results announcement shares trading at record levels for the 12 months to 31 March WHY ARE THE SHARES WEAK? and, like Rightmove, Auto Trader 2018. Alongside the numbers The company revealed in benefits from a market share themselves, guidance is likely March that used car stock for upwards of 70%. to be given for the 2019 the current financial year could Auto Trader’s website is the financial year. be flat or even down. Auto one most visited by prospective Trader is reliant on the used car car buyers because it has the VALUATION ANOMALY market (around 85% of the stock most listings. Car retailers are The recent takeover offer for MOST INFLUENTIAL WEBSITE FOR USED VEHICLE SHOPPING (%) Zoopla-owner ZPG (ZPG) shines a light on the valuation disparity between Auto Trader and other online businesses. ZPG’s deal was struck at an EV/EBITDA (enterprise value to earnings before interest, tax, depreciation and amortisation) multiple of just over 20-times based on Berenberg’s forecast EBITDA for the September 2018 2017 Study, Market Tracker Auto Trader Source: financial year. This is not out of step with valuations for internet-based

12 | SHARES | 17 May 2018 GREAT IDEAS therefore compelled to use its products, reinforcing its position.

WHAT DOES THE COMPANY DO? Auto Trader’s main area of business is Trade Services which sells subscriptions to retailers on a contracted basis. The remainder is largely accounted by private sellers, advertising agreements with partners in growth rate of 9% since IPO car buyers. areas like insurance, car finance (initial public offering) and says ‘Second, from this position it and vehicle checking, and this growth has been delivered will seek to move as much of the standard display ads on the site. in equal measure by increases car buying process online as is There are four key areas of in underlying price, more stock practicable. Finally, the group will operation – selling, buying, carried on the site and new continue to develop products, marketing and managing – and product development. data and services that deliver a each one is broken up into In other words, by cross-selling higher return on investment to different levels with price points and upselling to existing clients, retailers than the offline products moving progressively higher. the company can increase ARPR currently available.’ and further bolster its returns even Like many companies which DIDN’T IT USED TO BE A if the level of stock remains flat. move from private equity PRINT MAG? In the longer term the business ownership to the public markets, Launched in 1977 the print sees opportunities to increase its the company came to the market product was discontinued in 2013 penetration in the new car market with a lot of debt. Fortunately leaving the company 100% digital. and to enable transactions to be strong cash generation has More than 70% of visits to its sites carried out online. enabled the company to reduce now come through smartphones its net debt to earnings ratio and tablets. The company joined KEY POINTS TO WATCH from 3.4-times to 1.6-times the stock market in March 2015 at Numis’ Richards says in several while still paying out a third of its a price of 235p per share. ways Auto Trader will address earnings in dividends. Numis analyst Paul Richards the opportunities. ‘First, it will A potential risk is competition notes that organic revenue has seek to maintain its leadership from other online platforms advanced at a compound annual with used (and increasingly) new like Gumtree and Ebay but MISMATCH BETWEEN RESEARCH AND RETAILER COSTS these more generic sites lack the brand awareness and capabilities Auto Trader enjoys in the car market. (TS) BROKER SAYS: 4411

AUTO TRADER GROUP FTSE ALL SHARE 440 420 400 380 360 340

Source: Auto Trader, Numis Auto Trader, Source: 320

Rebased to first Source: Thomson Reuters Datastream 300 2017 2018

17 May 2018 | SHARES | 13 GREAT IDEAS Red tape is no barrier for Ideagen’s growth ambitions Management are aiming for 200p share price which looks achievable

he net of regulation red tape and compliance IDEAGEN  BUY accountability is getting (IDEA:AIM) 122.5p T Stop loss: 98p ever tighter around industries and organisations across the Market value: £245m world. The next big one is EU- wide General Data Protection Regulation (GDPR) which comes into force on 25 May and is the latest in a long list of rules designed to keep us better protected. the significant financial and one growth market, as it is the All this puts UK software reputational damage potential world’s single biggest place supplier Ideagen (IDEA:AIM) of not having adequate systems for GRC spending. That means in a sweet spot thanks to its in place. Blue-chip clients include accelerating acquisitions growth, wide range of off-the-shelf BAE Systems (BA.), Emirates, such as April’s $8.7m purchase specialised tools. Royal Dutch Shell (RDSB) and of Medforce, a healthcare The Midlands-based company the European Central Bank, plus compliance business. concentrates on what it calls the more than 150 hospitals in the Investors are being asked to governance, risk and compliance UK and US. pay a premium for this high (GRC) space, providing This is a $7bn-a-year GRC quality stock, hence the current information management market yet it remains highly year price-to-earnings multiple solutions to highly regulated fragmented. Ideagen, which has of 25.5. But there is scope to industries. Think healthcare, been around since 1993, wants outstrip current 4.8p earnings aviation, banking/finance, to act as an industry consolidator per share forecasts by a wide complex manufacturing, defence as well as driving consistent margin. Management have an and energy. organic growth. internal target of 200p for the share price. Ideagen will have to COMPELLING STORY DOUBLE EVERY THREE YEARS work hard to hit this level but it Ideagen supplies an integrated It aims to double revenue and does look possible if the business system that combines profit every three years and has can continue its long streak of information from multiple met or beaten those targets in success. (SF) operational sources on top of the past. For example, in 2015 it the typical internal audit and reported revenue of £14.4m and BROKER SAYS: 001 compliance functions. This £3.6m pre-tax profit. The year IDEAGEN FTSE ALL SHARE provides clients with a detailed to 30 April 2018 is expected to 130 125 overview of corporate risk, show £36.1m of sales and £9.7m 120 115 controls and consequence of pre-tax profit. Throughout 110 105 mitigation analysis. this growth the company has 100 95 That’s an increasingly remained highly cash generative 90 compelling sale once an and paid modest dividends. 85 80 Rebased to first 75 Source: Thomson Reuters Datastream organisation begins to grasp The US is now its number 2017 2018

14 | SHARES | 17 May 2018 ne & Spi i rit l W C a o n m o i p

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XP POWER AVESORO RESOURCES (XPP) £35.90 (ASO:AIM) 272.5p

Gain to date: 48.9% Gain to date: 0.9% Original entry point: Original entry point: Buy at 270p Buy at £24.11, 6 July 2017 (adjusted for consolidation), 8 June 2017 WE SENSED A new acquisition was incoming at OUR TRADE ON the West African gold miner is XP Power (XPP) and sure enough it arrived on back in the money after a disappointing period 10 May. The power switching technology designer last year. The latest quarterly update confirms our is using bolstered £125m debt facilities in paying original view that the business could be put back £31.8m to buy Glassman High Voltage, expanding on an attractive growth path. the product range into specialised high voltage and First quarter gold production of 68,088 ounces is high powered products. considerably ahead of the run-rate to hit full year This should help the enlarged XP engage with guidance of 220,000-240,000 ounces. Operating new customers but equally important, supply a cash costs of $624 per ounce sold are near the broader range of technology solutions to bottom end of full-year guidance. And AISC (all- existing accounts. in sustaining costs) of $914 per ounce sold is well Importantly, analyst research suggests that below full-year guidance of $960-$1,000 per ounce. Glassman has cleverly positioned itself away from Chief financial officer Geoff Eyre admits that pockets where competition, and presumably Q1 is likely to be the strongest quarter this year price pressure, is most intense. Researchers at as it was driven by high-grade sections at its investment bank Stifel also believe underlying gross Balogo mine. margins run at roughly similar levels to XP’s 46.5%. Its New Liberty mine is continuing to improve Using debt instead of equity to fund the deal following a restructuring plan. Eyre says all-in means no dilution for existing shareholders. It sustaining costs should come down significantly also sees earnings per share estimates raised 4% once Avesoro has finished additional waste for 2018 and by 9% in 2019, implying a price to stripping at New Liberty in 2019. earnings multiple of 20.3, falling to 18.4 next year. As a business it is generating plenty of cash to pay down debt and to fund exploration on numerous targets, plus in-fill drilling to increase confidence XP POWER FTSE ALL SHARE over existing discoveries and extend mine life. 3800 Rebased to first AVESORO RESOURCES 3600 FTSE ALL SHARE 3400 300 3200 280 3000 260 2800 240 2600 2400 220 Source: Thomson Reuters Datastream 2200 200 2017 2018 180

Rebased to first Source: Thomson Reuters Datastream 160 SHARES SAYS:  2017 2018 XP continues to shine as a high quality technology design business. Investors should continue to SHARES SAYS:  support management’s combined organic and M&A Avesoro is one of the most interesting growth stocks growth push. (SF) in the gold mining space. Keep buying. (DC)

BROKER SAYS: 3 1 0 BROKER SAYS: 1 0 0

16 | SHARES | 17 May 2018 We're investing in ugly ducklings...

At the Scottish, we take a contrarian approach to global We have the conviction to back our ideas stock markets. We are patient investors. When we see that positive change is afoot we have the conviction to back our ideas. But we know it can Our philosophy is simple. We recognise that popular stocks become take time for the changes we see to be recognised by investment overvalued while unfashionable stocks are often too cheap. We markets. That’s why we take a long-term view. favour the out-of-favour and look for the signs of change that others overlook - and we aim to exploit this ineffi ciency to deliver long-term Our high conviction contrarian approach means that when the gains for our investors. market reassesses the out-of-favour investments we prefer, our best Exploiting irrational markets ideas really count. By the time everyone realises that a great company is great it may no Stand out from the crowd longer be the best investment. It becomes diffi cult to see the storm Our investment approach is truly differentiated in a world awash on the horizon when everyone is toasting past success. with index trackers. We don’t want to own the overpriced areas of Similarly, when a company has hit rock bottom, it can be hard to see the market so the investment portfolio is constructed without the that there will ever be good times again. constraints of a benchmark. This means we expect our performance to be differentiated too. Investment markets are driven by cycles of emotion, rather than dispassionate calculation, and this leads stocks to be priced too Built for uncertain times highly in the good times and undervalued when times are bad. When the market mood turns, we believe it is important to have a keen eye on risk and reward. That’s particularly pertinent when This ineffi ciency is driven by human nature - people feel comfortable markets have soared through successive highs. The recent wobbles sticking with the crowd. But the herding instinct that ensured human in equity markets hint at a reassessment of the more speculative survival in the past may not serve our best interests in fi nancial areas of the market. markets. We believe it pays to ignore these instincts when it comes to making investment decisions. In contrast, the out-of-favour areas we prefer are ripe for recognition. That’s why we believe it pays to invest in ugly ducklings that can turn By looking for positive signs of change in the out-of-favour areas of into beautiful swans. the market, and avoiding the unsustainable bubbles, we see a better balance of risk and reward. For more information visit www.thescottish.co.uk

Please remember that past performance may not be repeated and is not a guide for future performance. The value of shares and the income from them can go down as well as up as a result of market and currency fl uctuations. You may not get back the amount you invest. The Scottish Investment Trust PLC has a long-term policy of borrowing money to invest in equities in the expectation that this will improve returns for shareholders. However, should markets fall these borrowings would magnify any losses on these investments. This may mean you get back nothing at all. Investment trusts are listed on the London Stock Exchange and are not authorised or regulated by the Financial Conduct Authority. Please note that SIT Savings Ltd is not authorised to provide advice to individual investors and nothing in this promotion should be considered to be or relied upon as constituting investment advice. If you are unsure about the suitability of an investment, you should contact your fi nancial advisor. This promotion is issued and approved by SIT Savings Ltd, registered in Scotland No: SC91859, registered offi ce: 6 Albyn Place, Edinburgh, EH2 4NL. Authorised and regulated by the Financial Conduct Authority. Telephone: 0131 225 7781 | Email: [email protected] | Website: www.thescottish.co.uk FUNDS THAT OUTPERFORM 10 AGAIN AND AGAIN

We use the information ratio to spot investment products that have consistently done well

BY DANIEL COATSWORTH & DAVID STEVENSON

ne of the best ways to pick funds is to Hughes says it can be a good way of separating look at the long-term track record and two funds that have similar absolute performance to see how a product has performed but which have been achieved in very through different economic cycles. different ways. You should try and find out if a fund has ‘While it is possible to be lucky over the short been able to deliver again and again, and term, those fund managers that can have a good Ohasn’t merely had a few spectacular years to help information ratio over the long term arguably lift the long-term average figure. have been able to evidence skill in stock selection A good way to help filter the market is to use as it is far harder to be lucky over long periods.’ something called ‘the information ratio’. This is a measure of consistency in outperformance. HOW DO YOU KNOW IF A RATIO IS ‘The information ratio is an interesting way of GOOD OR BAD? looking at fund manager returns as it indicates In a nutshell, an information ratio above 0.5 whether a manager is being rewarded for is considered to be good. A figure above 1.0 is investing away from the benchmark,’ explains considered to be excellent. Ryan Hughes, head of active portfolios at AJ Bell. Our research finds that 13 funds have scored ‘Put another way, it is an assessment as to above 1.0 based on the past 10 years; and 78 whether the active bets in the portfolio have funds score above 0.5 over the same time period. paid off.’ We acknowledge the information is based on

18 | SHARES | 17 May 2018 past performance which isn’t always a guide to the period under review, or indeed the future performance. However, the ratio can be fund manager. a useful tool as part of your wider investment ‘While it is a good method of identifying research process. consistency, especially when used over a long Later in this article we’ll look at 10 collectives period, not all fund managers are able to deliver that have superior information ratio scores consistent performance,’ comments Hughes based on data for the past 10 years. They’ve all at AJ Bell. achieved an information ratio in excess of 1.0. ‘Some managers have a strong investment The list of funds includes some well-known style which will come in and out of favour. products such as LF Lindsell Train UK Equity We expect such managers to have periods of Acc (GB00B18B9X76) as well as other funds underperformance and outperformance but such as BlackRock European Dynamic D Acc when their style is in favour, we expect them (GB00B5W2QB11) and Liontrust Special to outperform strongly. This return profile is Situations I Inc (GB00B57H4F11). not conducive to having a good information ratio but it doesn’t make these managers bad WE’VE HAD THE PROS…. fund managers.’ WHAT ABOUT THE CONS? Hughes says those managers who have Before we profile the 10 funds, it is important to an excellent information ratio in the data for understand the potential downsides of using the this article have clearly been able to deliver information ratio. consistently good performance over a long ‘Investors should be aware that the period of time but it won’t make them suitable information ratio is highly dependent on the investments for everybody. time period under measurement and the chosen ‘That said; managers such as Anthony Cross benchmark index,’ wrote Deborah Kidd from at Liontrust, Nick Train at Lindsell Train or Alister Boyd Watterson Asset Management in 2011. Hibbert at BlackRock (whose funds appear on For example, research by Thomas Goodwin Shares’ list in this article) are clearly talented in 2009 found that managers benchmarked fund managers who have stood the test of time against the S&P 500 index as a proxy for the over very differing market conditions. market had lower information ratios than those ‘Their work is to be commended and they are benchmarked against the Russell 1000 Index. quite rightly lauded as some of the best in the The latter is a much broader index than the S&P business. The information ratio is an excellent 500 although both are considered to be large cap method of identifying these characteristics.’ stock benchmarks. Similarly, managers who used the Russell 2500 index as a proxy for the small-cap universe had notably poorer information ratios than managers measured against the Russell 2000. HOW DOES THE INFORMATION RATIO DIFFER TO THE SHARPE ‘Favourable information ratios can be RATIO? generated by manipulating the measurement period to include or exclude certain performance The information ratio is a risk- periods,’ said Kidd. adjusted performance measure. It ‘Market conditions during the time period is a special version of the Sharpe under evaluation should also be considered. Ratio. It differs in the sense that the Were market returns dominated by a value or benchmark doesn’t have to be the growth style or by cap size? Does the investor risk-free rate. believe the style – and the manager’s strategy in The Sharpe ratio is calculated relation to it – will continue?’ using standard deviation and excess return to determine reward per unit HAVE THERE BEEN ANY CHANGES? of risk. Another point to consider when using the information ratio to find superior funds is whether a fund’s strategy has changed during

17 May 2018 | SHARES | 19 STEWART INVESTORS ASIA PACIFIC ‘It typically loses less than peers in down SUSTAINABILITY B GBP ACC markets, although it can lag in certain market conditions such as low-quality or cyclical rallies. (GB00B0TY6V50) ‘We continue to have faith in the consistently applied investment process and in the experienced This fund invests in Asia Pacific-focused manager and relatively stable sub-team who companies which are positioned to benefit from, implement it.’ and contribute to, the sustainable development of It aims to maintain a portfolio of between the countries in which they operate. 60 and 80 individual stocks in which the fund Fund manager David Gait launched the fund in manager has high conviction. 2005 and still runs it today. It has achieved 248.1% The bad news for individuals not already invested return in the 10 years to 31 March 2018, nearly in the fund is that Stewart Investors has imposed double that of its benchmark (133.6%). measures to deter new money flowing into its ‘The portfolio will often have a high active product as it wants to avoid the fund getting too big. share relative to its MSCI AC Asia Pacific ex Although you can still invest in the fund, you’re Japan benchmark, and the biases inherent in faced with an initial 4% charge imposed by the the strategy lead to a performance profile that asset manager. can differ significantly from its peers,’ says Morningstar analyst Simon Dorricott.

10 year information ratio 1.30 10 years annualised returns: 13.37% Stewart Investors’ fund has a stake in healthy drinks Benchmark: 8.45% and food business Standard Foods Corporation

FIDELITY UK SMALLER COMPANIES W operational change ACC (GB00B7VNMB18) comes through and market perception 1.23 Fund manager Alex Wright has looked after the improves, resulting Fidelity UK Smaller Companies Fund since its in a portfolio 10-year launch in February 2008 and is highly rated as of holdings a small cap stock picker. However, Jonathan demonstrating information Winton has co-managed the fund since 2013 and different ratio has become increasingly influential with stock characteristics.’ selection and portfolio construction. Matthew ‘The portfolio is built from the bottom up and Jennings, continues to follow a well-defined process,’ investment director at Fidelity International, says says Morningstar analyst Simon Dorricott. ‘The the fund’s performance can largely be attributed manager seeks stocks that offer strong downside to the ‘bottom up’ stock picking skills of Wright protection with unrecognised growth potential, and Winton, ‘focusing on unloved and undervalued which will include internal and/or external change. stocks where they believe the market has ‘He looks to buy into such situations at an early overlooked the potential for recovery’. stage, ideally before any recognition of a change Like the aforementioned Stewart Investors in fortunes. These positions are then held as product, Fidelity UK Smaller Companies is another soft-closed fund. However, we note that 10 year information ratio 1.23 AJ Bell Youinvest has an agreement with the 10 years annualised returns: n/a asset manager so that it is still able to accept investments in the fund without any initial charge (5 years: 14.76% / benchmark: 13.01%) that usually comes with soft-closed products.

20 | SHARES | 17 May 2018 LIONTRUST SPECIAL SITUATIONS I INC for others to get at and replace,’ says Cross. (GB00B57H4F11) The fund has a low portfolio turnover which Cross explains is often driven by takeovers – as This fund is managed by Anthony Cross and evident by Fidessa and fellow holding Shire both in Julian Fosh and is very particular about the type bid situations. of companies that it holds. Cross explains that Another must for the manager is recurring companies must have ‘certain intangible assets’ revenue, targeting companies with at least 70% of including intellectual property, trade secrets ‘know income coming from established sources. how’ and large scale distribution networks. While the fund can invest in companies of any The point of these attributes is that they are size, Cross reveals that it has around 30% of its hard to copy, thus giving these companies high portfolio in small caps. He says the team has a lot barriers to competition. In terms of companies of small cap experience and if they find a great with large distribution networks, Cross cites drinks small company and let it compound for 10 years, company Diageo (DGE) and consumer staples investors can receive ‘lovely returns’. Companies company Unilever (ULVR). the team avoid include cyclical stocks such as ‘We also like data driven distribution networks housebuilders and banks. that you find in Rightmove (RMV). Fidessa (FDSA), or market research businesses like YouGov (YOU:AIM). Data is within their clients so difficult

10 year information ratio 1.14 10 years annualised returns: 14.30% Liontrust’s fund has a stake Benchmark: 6.74% in Guinness maker Diageo

BLACKROCK EUROPEAN DYNAMIC D ACC a lot of competition to find different companies to (GB00B5W2QB11) those owned by rival funds. But its focus on both growth and value stocks seems to be paying when Given the resources of the world’s largest asset looking at its superior performance. manager BlackRock, its fund managers can The portfolio currently includes stakes in be assured of having a well-resourced team aerospace group Airbus and German car-parts supporting them. maker Continental. Run by Alister Hibbert, BlackRock European Dynamic seeks mispriced companies through rigorous bottom-up fundamental research. Crucial for stock selection is finding companies which have potential share price drivers that the market has yet to appreciate. For example, this could involve spotting companies which have stronger earnings potential than the market is anticipating. Given the Europe ex-UK region is a favourite for fund managers at the moment amid reasonable valuations and decent growth indicators, there is

10 year information ratio 1.09 10 years annualised returns: 12.17% BlackRock European Dynamic Benchmark: 5.60% has a stake in Continental

17 May 2018 | SHARES | 21 ROYAL LONDON UK EQUITY INCOME M research is quite INC (GB00B3M9JJ78) selective as these tend to focus Run by the highly experienced Martin Cholwill, on accounting Around half of the this fund invests in the type of companies often earnings rather fund’s holdings expected in a UK equity income fund such as than cash flow and Royal Dutch Shell (RDSB), HSBC (HSBA) and BP his main concern are FTSE 100 (BP.). It also has a selection of smaller companies is for a company’s companies which are believed to become consistent dividend ability to maintain payers at some point. and grow its Cholwill has a big focus on free cash flow when dividend. choosing his holdings and for a fund targeting Given the dividend focus, the fund’s exposure almost 4% yield this seems a sensible metric to small caps is limited as many companies to use. He believes that accounting earnings down the bottom of the market cap spectrum are can be manipulated whereas cash is more unlikely to pay dividends. Around half of the fund’s tangible and that it is cash that pays the dividend holdings are FTSE 100 companies although given and something immune from any ‘creative’ the position sizes are based on conviction, the accounting. fund’s sector allocation can look very different For this reason, Cholwill’s use of broker from the index itself. Part of the reason for having a conviction-led approach is that Cholwill is aware that the majority 10 year information ratio 1.09 of dividends are generated by a small group of 10 years annualised returns: n/a mega caps so he uses this technique to avoid (5 years: 10.70% / Benchmark: n/a) over-concentration in those names.

LF LINDSELL TRAIN UK EQUITY ACC funds because of its experienced manager, well- (GB00B18B9X76) defined and consistently applied investment approach, and competitive fee structure.’ This is perhaps one of the best known products in Current holdings in the fund’s portfolio the UK funds universe, thanks to fund manager include consumer goods group Unilever, drinks Nick Train’s great reputation. It invests primarily giant Diageo, information and analytics firm in UK company shares and has a concentrated RELX (REL) and investment platform provider portfolio with low turnover. Train has run the Hargreaves Lansdown (HL.). fund since launch in 2006 but has been a well- In April, Train said that companies representing known figure in the industry for longer thanks to 5.5% of his portfolio have received takeover bids that his involvement in another fund called Finsbury look likely to succeed, meaning he could get a large Growth & Income (FGT). chunk of cash in the near future to either add new ‘Train’s process is differentiated and has proved names to the portfolio or buy more of existing ones. successful across a variety of market conditions. He looks for unique and high-quality companies that offer a high and sustainable return on equity, show low capital intensity, and are cash- generative,’ says Dorricott at Morningstar. ‘This remains amongst our highest-conviction

10 year information ratio 1.07 10 years annualised returns: 14.59% Current holdings include drinks giant Diageo Benchmark: 6.74%

22 | SHARES | 17 May 2018 BAILLIE GIFFORD JAPANESE B ACC The fund also likes companies in turnaround (GB0006011133) mode; those that look to be struggling but are putting through structural change to benefit the Similar to the aforementioned Liontrust product, company in the long term. this fund from Baillie Gifford looks for companies The portfolio of between 45 and 60 stocks with low levels of competition that are also durable are chosen with little regard to the companies’ and growing. importance to the index. The fund also holds young companies capable of double-digit growth rates that can be sustained Baillie Gifford’s largest for years to come. holding is Softcorp Bank Alex Blake, client manager at Baillie Gifford, says: ‘The market’s preoccupation with short- term trends and themes generates exploitable opportunities for patient, bottom-up investors, not least because there is a persistent tendency for the market to undervalue sustainable earnings and cash flow growth.’ Baillie Gifford is happy to hold cyclical stocks with its largest holding being Softcorp Bank.

10 year information ratio 1.07 10 years annualised returns: 12.53% Benchmark: 8.39%

MAN GLG CONTINENTAL EUROPEAN can benefit from scale as they expand. Naturally GROWTH C PROFESSIONAL these companies have to be financially strong (GB00B0119487) and trading on a reasonable valuation at the time of investment. Fund manager Rory Powe has invested in Powe has proven to be exceedingly good at his European stocks for more than 25 years including job based on past performance figures, so we long periods at Powe Capital and Invesco before believe it is worth having his fund in your portfolio joining Man GLG in 2014. in order to benefit from exposure to Europe. The Man GLG European fund is reasonably concentrated, aiming for between 30 and 40 holdings. It takes a long-term approach and likes to invest in Europe’s strongest companies. As a result, you’ll see some holdings that have strong market positions such as airline Ryanair (RYA) and car maker Ferrari. He likes companies with a sustainable competitive advantage and where they can raise prices without having a negative impact on consumer demand. He also like companies which

10 year information ratio 1.06 10 years annualised returns: 12.68% This fund likes to invest in Europe’s Benchmark: 5.6% leading companies such as Ferrari

17 May 2018 | SHARES | 23 INVESCO PERPETUAL GLOBAL We note there has been a change in fund SMALLER COMPANIES Z ACC manager over the past 10 years with current lead (GB00B8N46D97) manager Nick Mustoe only having run the fund since July 2015. He is helped by Juan Hartsfield who started a year later on the fund. Launched in 1984, this fund invests in smaller However, these two individuals have companies around the world. Smaller companies considerable help from colleagues at Invesco. have historically outperformed large caps Strictly speaking, the fund is managed by although they have also been a higher risk area in Invesco’s ‘Global Smaller Companies Group’ which which to invest. contains many different fund managers, product According to data at the end of March 2018, and investment strategists, with Mustoe chairing nearly 30% of the Invesco fund’s portfolio this group (as well as being Invesco’s overall contained US-listed stocks, circa 13.5% Japanese- chief investment officer). The fund managers listed stocks and just over 11% UK-listed stocks, also tap into the investment resources of their among other geographical exposures. own regional teams. You may be unfamiliar with most of the names in Decisions are taken with a long-term its top holdings apart from Hyundai Motor, Samsonite perspective which inevitably means the portfolio and Philips Lighting. The portfolio currently has 380 turnover is kept low. holdings so risk is spread quite widely.

10 year information ratio 1.04 10 years annualised returns: 11.97% Nearly 30% of the Invesco fund’s Benchmark: n/a portfolio contains US-listed stocks

ROYAL LONDON UK MID-CAP GROWTH M management, pricing power and strength of the ACC (GB00B5BRW420) balance sheet. He will visit companies to facilitate idea generation. Managed by Henry Lowson, the fund seeks to achieve capital growth over the medium to long term by investing in mid cap companies. Its top holdings include some solid mid-market names including Dechra Pharmaceuticals (DPH) and BBA Aviation (BBA). Lowson’s approach is to choose companies which he believes can grow their profits and cash faster than the market and ultimately become large cap companies. He seeks companies where all the good news is not reflected in the share price and where there is potential upside to valuation ratings and analyst expectations for earnings. The fund manager looks at the industry in which a company operates and then analyses its place in the sector. His checklist includes quality of

10 year information ratio 1.02 10 years annualised returns: 13.67% Top holdings include Benchmark: 10.65% BBA Aviation

24 | SHARES | 17 May 2018 JULY 032018 etc.venues - St Paul’s 200 Aldersgate London EC1A 4HD

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INVESTMENT TRUSTS FOR INCOME WIN A HAMPER In many investors’ minds investment trusts are thought of as income generating Attend the event on 03 July investments. Indeed there are many that have fantastic, long-term track records of 2018 and you will be entered paying dividends and feature in many investors’ portfolios. into a prize draw to win a There are lots of different ways that investment trusts invest to generate their Fortnum & Mason Wayfarer income. They can be used to get exposure to different markets and asset classes Hamper worth £150 which so understanding where and how they put their money to use can help you better will be presented on the night understand which investment trusts are right for you. (Terms and Conditions apply) Come to the free Investment Trusts for Income event to hear insights from leading fund managers on how the investment trusts they are responsible for generate income, get your chance to ask the questions that matter to you and network with your fellow investors.

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Follow this link www.sharesmagazine.co.uk/events for full details and to register for your complimentary ticket. Tom Sieber Deputy editor – Shares Magazine Event details Registration contact Tom will be presenting on how Registrations 18:00 Corinne Bailey income can help unlock the Presentations start at 18:30 [email protected] wealth generating potential of Complimentary drinks and buffet 020 7378 4406 the markets. available after the presentations INVESTMENT TRUSTS Three investment trusts to play the rising oil price We look at the options for investors looking to gain exposure to crude

il prices are heading Founded in 2000, Riverstone with the remainder in miners. towards the $80 mark as completed a £760m stock Managed by Olivia Markham O armed conflict between market listing in 2013 with and Tom Holt, performance has Iranian and Israeli forces follows several industry heavyweights as been patchy with the NAV only up hot on the heels of the US directors. around 3% in the last five years. president Donald Trump’s decision The £1.29bn trust trades Unlike Riverstone it does, as its to exit the Iran nuclear deal. at a 16.9% discount to net asset name implies, pay a dividend. At Investors looking to benefit value (NAV) at its current share 81.7p the BlackRock trust trades from the oil price surge have the price of £12.64. at a 5.5% discount to net asset option of investing in individual The portfolio is very value and is on a trailing dividend companies, although this does concentrated with 14 active yield of 4.9%. come with substantial exposure investments. The focus is to the risk of these individual on Western Canada and the BROADER FOCUS companies enduring operational Permian basin which spans New Oil prices can be volatile and, failures. Mexico and Texas. Its only listed for this reason, you might feel It is also possible to play the holding is US firm Centennial. more comfortable considering an oil price directly using exchange- Its NAV has increased by investment trust with a broader traded products, however the more than 50% since inception mandate which includes exposure long-term returns from these but weak sentiment towards to oil and gas companies as well instruments can be affected by the the sector has seen its shares as other sectors. quirks of the oil futures market. struggle to keep pace. One possibility, a current An alternative is to look at An alternative investment constituent of our Great Ideas the funds and investment trusts trust relevant to the oil space is portfolio, is Merchants Trust which invest in numerous energy BlackRock Commodities Income (MRCH). stocks. The best example of a (BRCI). However, it isn’t a pure The fund has 11.9% of the trust with a specific focus on play on the black stuff as only portfolio in oil and gas through the oil sector is Riverstone around 40% of the portfolio is its holdings in BP (BP.) and Royal Energy (RSE). invested in the oil and gas space Dutch Shell (RDSB). (TS)

Crude Oil $/Bbl May 2018 Crude pushes to its highest 80 level since November 2014 as Trump pulls out of Iran nuclear deal 75 January 2018 Oil back above $70 per barrel as OPEC cuts help rebalance the market 70

65

60

55 April 2018 Oil nears $75 per barrel on Syrian tensions and as Saudi Arabia signals it would 50 be comfortable with $88 per barrel oil prices

2018 Source: Shares, Thomson Reuters Datastream 45 2017 MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY

26 | SHARES | 17 May 2018 INVESTMENT TRUSTS Investment trusts exposed to Argentina’s inflation, currency and interest rate problems Certain Latin America and emerging markets trusts are facing major headwinds

nvestors owning Latin America on lavish spending to avoid a jumping ship. and emerging markets funds recession during the monetary Sadly, Argentina’s high fiscal Ishould check for any exposure adjustment period.’ spending ‘failed to stimulate to Argentina after the country The government’s spending real investment since the large lifted interest rates to a staggering spree and hefty interest rates volumes of government debt 40% in a desperate attempt to inevitably drew ‘hot money’ issuance crowded out the private prop up the peso and gain control from overseas, which is now sector,’ adds Dehn. (SF) over rampant inflation. Three investment trusts stand ARGENTINE PESO TO US $ out for their notable exposure 24 to Argentina. The country 23 Interest rates hiked accounts for 16% of BlackRock 22 to 40% Frontiers’ (BRFI)net asset value 21 (NAV), including 2.6% of the 20 Argentina raises fund invested in shares of Banco 19 inflation target Macro, the nation’s second largest 18 Central bank sells domestically-owned private bank. 17 $1.5bn of national 16 Rebased to first reserves

Utilico Emerging Markets (UEM) Source: Shares, Thomson Reuters Datastream 15 has about 10% of its NAV in the 2017 2018 Latin American nation. This is largely through sizeable stakes INVESTMENT TRUSTS EXPOSED TO ARGENTINA in financial services company AND LATIN AMERICA (% OF PORTFOLIO) Bolsas Y Mercados Argentinos, Argentina and energy industry operators BlackRock Frontiers (BRFI) 16.0 Transportadora de Gas del Sur and Utilico Emerging Markets (UEM) 10.2 Pampa Energia. And Aberdeen Aberdeen Frontier Markets (AFMC) 9.1 Frontier Markets (AFMC) has 9.1% BlackRock Latin America (BRLA) 4.9 of NAV in Argentina. Aberdeen Latin American Income (ALAI) 4.2 WHAT’S GOING ON? JPMorgan Emerging Markets (JMG) 2.3 ‘Argentina’s problems are entirely F&C Managed Portfolio Growth (FMPG) 2.0 self-inflicted,’ says Jan Dehn, head Murray International (MYI) 1.1 of research at Ashmore Group, F&C Managed Portfolio Growth (FMPI) 1.0 who points to the nation’s botched Aberdeen Emerging Markets (AEMC) 1.0 attempt to manage inflation Fundsmith Emerging Equities (FEET) 0.8 expectations in December. Genesis Emerging Markets (GSS) 0.3 The underlying reason for the BlackRock World Mining (BRWM) 0.2 failure to control inflation lies with the fiscal authorities, says Dehn. Templeton Emerging Markets (TEM) 0.2 ‘They have consistently insisted Source: Stifel, AIC

17 May 2018 | SHARES | 27 Only SHARES magazine subscribers benefi t from an investment INVESTMENTtoolkit that gives them the edge and helps them make the very FACTS.Do you have best investing decisions. WHO CAN YOU TRUST? the SHARES • Live share prices • Customisable live watch list In uncertain times, when the • Portfolio manager economyadvantage? is buffeted by change, • Fund selector and prices it can be hard to know who to • Intraday and historic charts trust when investing. • Latest broker forecasts with alerts • Latest director deals with alerts Shares magazine is produced by our expert editorial team, offering 24/7 coverage and insight into today’s vibrant • Fundamentals and investor tools investment markets. • Online discussion forum A subscription to Shares gives you access to the SHARES • Priority booking for investor digital investment hub and a host of benefits including: events > Your weekly digital magazine brimming full • Educational and company videos of investment ideas • …and of course, the weekly > Market news and company updates digital Shares magazine with the > Exclusive investor tools including live share prices latest news and views from the Shares experts Try it now for just £1 for the 1st month and then just £12 a month*. £

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* The £1 for 1 month and then £12 a month offer is only available to new subscribers. Your fi rst payment will be £1 and thereafter subscriptions will automatically continued, billed at £12 per *month The £1 unless for 1 monthcancelled. and thenSubscriptions £12 a month can offer be cancelled is only available at any time to new by callingsubscribers. 020 7378 Your 4424 first between payment 8am will - be4.30pm £1 and on thereafter Monday tosubscriptions Friday. No refunds will automatically are offered duringcontinued, the cancellationsbilled at £12 per monthperiod unlessbut all cancelled.outstanding Subscriptions issues and services can be cancelled will be fulfi at lled.any time For enquiresby calling contact 0207 378 us 4424 at [email protected] between 8am - 4.30pm on Monday to Friday. No refunds are offered during the cancellations period but all outstanding issues and services will be fulfilled. For enquires contact us at [email protected] FUNDS The micro cap fund streets ahead of its peers Livingbridge UK Micro Cap’s focus on profitable, sensibly valued growth tiddlers is a winning formula

nyone seeking exposure CUMULATIVE PERFORMANCE to very small companies Aon the UK stock market 1 year 3 years 5 years via the funds route should look LF Livingbridge UK Micro Cap Fund 22.1% 58.1% 151.8% at LF Livingbridge UK Micro IA UK Smaller Companies sector 14.5% 50.7% 97.3% Cap Fund (GB00B55S9X98) which has a great record of sectors,’ he explains, namely ‘We believe in small cap, outperformance. TMT (tech, media, telecoms), where the market research Managed by Ken Wotton, business services, healthcare coverage is very low and it has generated annualised and education, and consumer where there is pretty limited trailing returns of 17.35% and markets. information on public market 20.85% on a three year and These sectors are consistent competitors and peers, having five year basis respectively, across the whole firm, where the resource internally and the according to Morningstar. it has 20 years’ investing network behind it is a way that The brains behind the fund experience. ‘That’s a huge we can do our own fundamental is asset manager Livingbridge, amount of knowledge, insight research on the companies. which looks after around £2bn and relationships in those ‘We meet hundreds of private of assets across its private sectors that we can call on companies every year and equity funds, two UK equity to generate ideas, evaluate we’ve got a database of over funds and the Baronsmead companies and monitor 20,000 companies in the UK venture capital trusts (VCTs). investments once we’ve made that we’ve interacted with over ‘This Livingbridge platform them,’ explains Wotton. the years.’ is a key differentiator in how our public equity funds are managed,’ stresses Wotton. ‘Having this public equities business embedded within a private equity firm is pretty unusual and gives us lots of distinct advantages, particularly when looking at very small companies.’

PLENTY OF EXPERIENCE Wotton benefits from the investment expertise and contact books of a team of 50 investment professionals. ‘We’re all looking at small, UK growth companies and we Student accommodation expert Watkin all invest in the same four core Jones is one of the fund’s top holdings

17 May 2018 SHARES | 29 FUNDS

TOP HOLDINGS IN THE FUND Launched in May 2009, the Top 10 portfolio positions fund has performed well in good TOP TEN HOLDINGS include an eclectic bunch of markets and poorer markets (AS AT 31/03/2018) names. These span deep fat alike. ‘In 2013, which was a very fryer cleaning specialist Filta strong year for small caps, we Filta 4.36% (FLTA:AIM), pensions consultant had a fantastic year,’ he explains, Mattioli Woods (MTW:AIM), ‘but the portfolio also generated Mattioli Woods 3.95% private aviation play Gama positive returns in 2011 and Impax Asset Aviation (GMAA:AIM) and 2014, years when the small cap 3.94% Management environmentally-friendly sector was down. funds specialist Impax Asset ‘In a very strong year for small Restore 3.73% Management (IPX:AIM). caps, we’d typically perform in Wotton describes his investment the middle of the pack. If mining Xafinity 3.63% style, which enables him to whittle and oil and gas have a stonking Inspired Energy 3.50% down a universe of some 1,200 year, that’s going to be a relative companies in the sub-£250m performance headwind for Gama Aviation 3.22% market cap space to a portfolio of us. But we’ll make it up in 43 holdings as at 30 April, as GARP years where there’s a more Tarsus 3.07% (growth at a reasonable price) but challenging environment. with a quality overlay. ‘We’re a bit more resilient and Ergomed 3.04% ‘We’re long-term fundamental the companies we’re invested investors. We’re looking for in – cash generative, sensible Watkin Jones 2.95% businesses that can grow their valuations, not too cyclical – profits materially over the life of should outperform in more positioning in the sector.’ our investment which will typically difficult periods.’ Footasylum gets ‘early access to be a four-to-five year holding lines which are in demand which period and in some cases a lot EXAMPLES OF HOLDINGS drive footfall and if you go into longer than that. Despite the well-documented one of their stores, it doesn’t look ‘We’re looking for businesses challenges facing the retail like a Sports Direct, it looks like a that are either in structural growth sector, LF Livingbridge UK Micro cool destination for a 16-24 year areas or have secular growth Cap invested in the November old person to hang out in. Nike drivers behind them, so they’re 2017 stock market flotation of and Adidas are happy for them not overly affected by cyclical Footasylum (FOOT:AIM). to get involved in the product factors. We’re trying to find The fund manager calls it a positioning, the branding and businesses that can grow their market share growth story. ‘It is the marketing.’ profits even if the economy isn’t just a very focused and well-run His patience in holding Impax helping them. And a lot of that is business. It was founded by the Asset Management is beginning down to the management team original founders of JD Sports to be rewarded with the shares and their ability to execute on a (JD.) and the daughter of one of having nearly doubled in value growth plan.’ the founders is the current CEO, since last summer. Clare Nesbitt. We think she is a ‘Either it could attract more WHAT’S IN AND WHAT’S OUT? high quality CEO and on top of assets and grow profits materially Wotton avoids mining, oil and gas, the business. over time or someone could banking and insurance companies ‘Footasylum is a multi- potentially buy Impax to get its and also rules out early-stage channel footwear retailer; 30% capability in-house,’ says Wotton. businesses. of its sales are online, a pretty ‘The former has proved to be the The fund only invests in decent percentage for this kind case so far and last year Impax was profitable companies; and of retail business and it is clear re-rated, partly on asset in-flows profits and cash generation are about the demographic that it is and partly on a transformational key criteria. targeting and very clear about its acquisition.’ (JC)

30 | SHARES | 17 May 2018 You invest Invest from £25 a month in a low-cost DIY pension You choose Choose from a wide range of investment options You benefit Low-cost dealing from as little as £1.50

Open an account today youinvest.co.uk Low-cost SIPPs, ISAs, funds and shares

We don’t offer advice about the suitability of our products or any investments held within them, if you require financial advice you should consult a suitably qualified financial adviser. Tax treatment depends on your individual circumstances and rules may change. The value of investments can go down as well as up and you may get back less than you originally invested.

AJ Bell Management Limited, AJ Bell Securities Limited and AJ Bell Asset Management Limited are authorised and regulated by the Financial Conduct Authority. All companies are registered in England and Wales at 4 Exchange Quay, Salford Quays, Manchester M5 3EE AEQUITAS Insightful commentary on market issues Four lessons to draw from the year so far Many of the consensus calls have been wrong in the first half of 2018

he accompanying table suggests that 2018 is proving anything but straightforward, with PERFORMANCE OF LEADING ASSET CLASSES IN 2018 TO DATE T many popular asset classes failing to deliver and some unloved ones doing relatively well. 2018 Last 5 But investors can perhaps draw four lessons from to date years the market action in 2018 so far, as they seek 1 Crude Oil 12.8% (13.4%) to protect and growth their wealth. 2 MSCI Brazil 6.0% 13.5% Most investors are, in all likelihood, unlikely to be deflected from their strategic allocations 3 MSCI Information Technology 1.1% 18.3% by short-term whirls and eddies in the markets 4 FTSE EPRA/NAREIT UK 1.0% 1.9% and that is a good thing. It keeps down the risk of 5 FTSE AIM All-Share 0.7% 13.4% being sucked into trying to time the markets and 6 FTSE Small Cap 0.1% 13.0% helps to limit unnecessary trading expenses and commissions for good measure. 7 MSCI China (0.0%) 8.9% But for those investors who do have a percentage 8 Topix (0.2%) 13.2% of their assets set aside for tactical allocations, 9 MSCI Asia Pacific ex-Japan (0.4%) 10.9% 2018 has so far offered four trends which should JPM Emerging Market 10 (0.5%) 7.2% perhaps be borne in mind as portfolios are readied Diversified Bond for the summer and then the second half of 2018 11 Market iBoxx Gilts 1-5 year (0.5%) (1.1%) and beyond. 12 MSCI Russia (0.6%) 11.3% 1. MARKET S ARE STILL ADAPTING TO QT 13 MSCI Emerging Markets (0.8%) 9.9% While it is interest rates that attract the most 14 Market iBoxx Gilts (0.8%) (0.8%) attention when it comes to central bank policy, the 15 FTSE All-Share (0.9%) 7.8% Federal Reserve’s switch from quantitative easing (QE) 16 MSCI Europe ex-UK (1.1%) 8.9% to quantitative tightening (QT) is being overlooked. In addition, the Bank of England has stopped 17 FTSE 250 ex-Inv. Trusts (1.2%) 10.8% adding to its £445bn programme and the European 18 Gold (1.3%) (0.3%) Central Bank is slowly reducing its monthly 19 MSCI All-World stock index (1.8%) 11.5% stimulus. That leaves only the Bank of Japan Barclays Global Aggregate 20 (2.0%) 6.0% going all in on QE, as it continues to run its ¥80trn Bond Index a year scheme. Source: Morningstar Direct. Total return terms, in sterling. The BoJ’s stimulus equates to about $730bn a year – but the Fed will be withdrawing QE at an annual run rate of $600bn a year from perhaps putting upward pressure on yields for US October onwards. Government debt. That is a substantial decrease in global liquidity If QE really did help stocks, as seems possible, after a long span when cheap central bank cash the effects of QT may already be filtering through. drove bond yields down and equity valuations up. After all, the US stock market seem to be providing US investors now need to fund a huge near- everything the bulls expected after the Trump tax $1trn budget deficit by buying this amount of US cuts – rising profits, rising dividends, bumper share Treasuries and do so as liquidity is drained away, buybacks – except positive returns.

32 | SHARES | 17 May 2018 Insightful commentary on market issues AEQUITAS

US FEDERAL RESERVE IS STILL STICKING Professor Robert Shiller’s cyclically adjusted price TO ITS QT SCRIPT to earnings (CAPE) ratio as a benchmark would suggest that US stocks may struggle to provide positive returns on a 10-year view, should history deign to repeat itself. This chart shows the next 10 years’ compound annual returns from the S&P 500, according to the CAPE multiple paid to buy US stocks at the time – and the last three times valuations were this high since 1963 all presaged poor future returns.

US STOCKS STILL LOOK VERY EXPENSIVE BASED ON LONG-TERM EARNINGS METRICS 2. EMBRACE POLITICAL UNCERTAINTY Most investors will run a mile when confronted by political uncertainty. Yet the UK, dogged by a tangled Brexit debate which seems to be satisfying neither Remainers nor Leavers, is performing relatively well. Brazil is doing better still, even though it is mired in an epic corruption scandal and moving toward a general election. By contrast, nations where politics are seen as stable and helpful for markets, from India to China and Japan, are doing little to provide positive 4. BEWARE THE CONSENSUS returns in 2018 – and that’s before we get to the So far in 2018, a lot of the consensus calls have disaster that is Argentina. failed to comprehensively deliver or at least offer Political doubts can drive a currency down, investors positive returns (US stocks, tech stocks, to either provide an economic lift, via exports, India, China) while unloved assets (UK stocks, oil, or make assets look cheap to overseas buyers UK property) have done relatively well. (as the wave of mergers and acquisitions in the Perhaps the message is to be prepared for UK suggests). anything and maintain an accordingly balanced Emerging markets may therefore be portfolio that is as capable of protecting wealth as interesting here, after Malaysia’s shock poll result it is of growing it. and ahead of the ballots due in Mexico and Brazil, After all, the American writer and humourist while this column knows of some intrepid fund Mark Twain once wrote: ‘It ain’t what you don’t managers who are dipping their toes back into know that gets you into trouble. It’s what you know Russia (compliance departments permitting) for sure that just ain’t so.’ following the imposition of further economic sanctions by the US.

3. VALUATION NEVER MATTERS – UNTIL WHY IS THIS COLUMN IT DOES CALLED AEQUITAS? The battle lines remain drawn between ‘value’ and ‘growth’ investors. It is the Latin word The loss of absolute momentum in technology for equity and the stocks (even if they are still doing relatively well) origin of the modern and negative returns from US, Indian and word in both senses – Chinese equities, coupled with the relatively fairness and the value of a company’s shares. solid returns from UK stocks, would suggest that By Russ Mould, investment ‘value’ may be asserting itself. director, AJ Bell

17 May 2018 | SHARES | 33 RETIREMENT Produced by money s how 13 June 2018 12:30 - 17:30 ARE YOU RETIREMENT READY? Come to the Retirement Money Show at America Square, London, EC3N 2LB to find out more about retirement planning. All attendees will receive a goody bag that includes: REGISTER NOW

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PLUS all attendees will be entered into free prize draws for: Two tickets to the Windsor Enclosure at Royal Ascot, Two weekend tickets to the Ideal Home To find out more and register Show at Christmas and Two tickets to the RHS Hampton Court Flower Show. www.retirementmoneyshow.com [email protected] 020 7378 4406 It’s no fun getting old when you’re worried about If you are new to the world of investing and running out of money, so do you have a financial pensions, don’t think this event is only for plan for the possibility of living to be 100? Did you financially-savvy people with years of experience know that the current average retirement age is 64 in buying stocks, shares and funds. We purposely years old and the average life expectancy is now created an event that will serve the needs of both 81 years old? To put this into perspective you might amateurs and experienced investors. have to plan your retirement pot to last 17 years. The Retirement Money Show is free to attend; Come along to the Retirement Money Show, the you simply need to register in advance to secure

d Maida Vale Evers King’s Cross London-based afternoon event run by Shares and your ticket. The afternoon event is being held on 13 R St Pancras AJ Bell Media which takes place on d13 June 2018 June 2018 between 12.30 and 17.30 at the America S d a o t

h P n J C olt i HOXTONand features expert pension and financialR speakers Square Conference Centre, 1 America Square, d t y i a a o t l y

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Ma s ro A t E ’ a t e R r s y t Registert for free today and receive your n l n e G r e s l tre i h o e e S da V y r o r R b R Leve a t B Retirement Money Show goody bag when you Learn about: J a d t d Str o e t REGENT’S PARK y se a tre ’ a d S a S s t arrive! l • Managing cash flow & liquidity in retirement Ro d h O le ee S St I l H a Old Street n t ki rciv S • Balancing competing near and long-term t n S n e d u P t a Li n G Ro s n R e e St en s Euston t p r Discover morer about the most important retirementre financial demands o e o r e n o G r a a l s Gr Square W d h issues and how best to manage your hard-earneda • Living your life during retirement years S t t n o l et E h en ov t a F re t rd bu r C St money. The showa is suitable for people still in • Making sure you retire on the best income a e e a ld s Be E r e r O t G e r e n d n in C o g Warren P t v g employment and wantingr to better understand • Personal pensions – your guide to managed or i n t A f t i w d B lac t o CLERKENWELL y et Cl Regent’s Park t e y financial planning,S as well as those already in eself-investing Street u tr a tre r n ire S BLOOMSBURY S R t sh r n e n he e G rd R C P e Great Portland lfo h o retirement looking to get the mostShoreditch from their • ISAs – an alternative to pensions Pla Russell i be o i c o a R a Gu e a l Baker Street s w l d r Street d High Street e s o k r c Square R pension and other assets. • Long term managed income through Funds and C e e a Marylebone r o o SHOREDITCH t d S R oad ll R S a S Investment Trusts d tre e nw d oa lerke t R C G J Our speakers will be coveringh topics that are A5 ne e e o Russell o g t i eb r n l h y e r a a To S n relevant to both thoseH already in retirement and If these are some of the many retirement planning P at M L Square o F

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NOW m o a retirement is one of the big challenges facing Mike Boydell, Managing Director – Shares u n o R a r e G S ce m d e o d d e t t e t ad s millions of people today and a centrale theme to Dan Brocklebank, Director – Orbis Access s H a b n B HOLBORN r t u g PADDINGTON ig er a t r n Moorgate r the free-to-attend Liverpool Street Retirement Moneyc Show. It John Carnegie – Monks Investment Trust ke y S r o h e lbo e i Ho t a Pl tre o S High a St Chancery is one of a number of topics that we willl discuss Stewart Cazier, Head of Retail – ThinCats d r r t C me a a rti M g Str o E S o H s r h l c M Lane o London Wal t d t e a lb during the afternoon,p so come along to the event Nick Brindd , Fund Manager – ge R e e r o o rid g ee e t nc r e R B Paddington e tree n Lon h l w t rd S V d ’s s xfo rn Holborn e ia oarmedn with questionss as there will be a ewide Polare Capital Financials Trust p t t W i p ho Str n a e w O o r du a t is d e re Stre Ne b Lincoln’s Inn y ct ll B a B e e l e range of people happy to talk to you. hPaul Mahoney, MD & Founder – Nova Financial rd or o L a a gm et H n c Pr R Wi d Stre Tottenham h t Fields a a te G o xfor ig S n L N H i Tom Selby, Senior Analyst – AJ Bell O H K r ew h x a n e g o Court Road i e a u se e n t t n W d e t e You will have the opportunity to ask questions Paul Stallard, Commercial Director – s u g S d d u Oxford Circus e t s s N a S et Q F d o A5 Stre w to most of the speakersi and to interact withAldgate East The House Crowd t rd e t R ree xfo at ay St Paul’s c r St O e w CITY OF LONDON h n ou r specialists in savings, income, funds, ISAs and Presenter TBC – J.P. Morgan Asset Management e m Sey G B av t Aldgate r r on the exhibition stands. Presenter TBC – Close Brothers Asset Management t pensions/SIPPse ree i M C d rd St d e xfo Bond Street Ne C n St Paul’s Cathedral r O ra g St t a h e w S n ll a e i S M H B ri cr h Bank h s n t n A c c i ve d Marble Arch o t SOHO y r r n e a a n e R g g e r Ro w Mansion House u or r n l e S C t d e d e r e e C o l h l

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BATTERSEA PARK u m e o a l h l N S p ew la R C d MONEY MATTERS Helping you with personal finance issues

Is an early retirement

possible anymore?

Retiring before age 65 requires careful planning and considerable savings If retiring early is your goal, “ it’s important to accept that the responsibility for reaching “that goal lies solely with you

f you read the personal many retirements in the past are pays 5% of their salary into a finance pages of the media in terminal decline. pension each month, and their Iyou’re probably under the On top of this, average life employer matches this amount impression that retiring early – expectancy has risen, which with an additional 5%, they could if at all – is nigh on impossible means money in retirement has amass a pension fund worth these days. to last a lot longer. approximately £67,000 at age 55. While it’s true that retiring Back in the 1940s, people This could be used to fund an early is trickier than it was in the could expect to live around five income of £1,200 each year in past, it shouldn’t be impossible. to 10 years after retiring. These retirement, and they’d have to It merely requires a lot of days, a retirement of 20 years or wait at least another 10 years planning and careful saving in the more isn’t uncommon. to get a state pension worth early years of your career. ‘With less saving, less generous approximately £8,000 a year. workplace pensions and a longer But if the same individual kept WHY IS IT HARDER TO RETIRE life expectancy, the challenges working until age 65, the extra EARLY THESE DAYS? of funding an early retirement 10 years of investment growth Official figures show the number have increased,’ says Alistair would result in a pension fund of Brits who define themselves McQueen, head of savings and worth approximately £120,000. as retired before the age of 65 retirement at Aviva. This could be used to fund has hit an all-time low of 1.1m. an income of £3,200 each A lot of people genuinely HOW BIG AN IMPACT year in retirement, plus they’d want to keep working past WOULD WORKING LONGER get immediate access to their traditional retirement age, HAVE ON MY PENSION? state pension. but for many it’s a matter of The biggest risk of retiring early ‘The financial rewards of necessity rather than choice. is that your money will run out working longer are clear. In short, Saving rates in the UK are at too quickly. you’ll have more money to fund a near 50-year low and the final According to figures from Aviva, a shorter retirement, so you salary pensions that funded if a 35 year-old earning £25,000 can spread your savings more

36 | SHARES | 17 May 2018 Helping you with personal finance issues MONEY MATTERS generously,’ says McQueen. over a longer period of time. money you’ve got in ISAs and Figures from Scottish Widows other savings products. SHOULD I RULE OUT AN show that even a small delay in ‘The key message for people EARLY RETIREMENT? making payments can make a in their 20s is to stay in their The stats make for grim reading, huge difference. If a 20 year-old workplace pension. For people but it doesn’t mean an early starts paying into a pension, the in their 30s to 50s, it’s all about retirement is out of the question. value of their pot at retirement contributions,’ says Leandro. ‘There’s nothing stopping could be 64% higher than if they It’s worth remembering people retiring early today, waited until age 30 and made that you can make large one- although to do so you need to the same monthly payments. off pension contributions in save a large amount in the early ‘Whilst it’s true that you can addition to drip-feeding money years of your career or accept a save higher amounts later in life in each month. lower annual retirement income,’ to get to the same fund value, In total, you can make says Tom Selby, senior analyst at the amounts you need to save contributions (including tax AJ Bell. to make up for lost time are relief) of up to £40,000 a year. If retiring early is your goal, eye-watering,’ says Cochran. ‘If you have a windfall of spare it’s important to accept that the However, if you’re in your mid- cash and want to get the biggest responsibility for reaching that 40s and haven’t started planning bang for your buck, a pension goal lies solely with you. yet, an early retirement isn’t remains a very attractive vehicle,’ ‘When it comes to retirement necessarily impossible. says AJ Bell’s Tom Selby. these days people need to Paul Leandro, a partner at Another option to consider is engage their options more Barnett Waddingham, points working part-time in retirement, than they had to in the past out that pensions aren’t the only as this could help to supplement and they also need to prepare savings vehicle people can use. any income you receive through a bit more,’ explains Robert It’s worth checking how much pensions and from the state. (EP)

Cochran, pensions expert at Scottish Widows. ‘It’s not harder to retire, it’s just that there is more choice and people need to take more responsibility for their own If a 20 year-old starts retirement.’ How much you save has the paying into a pension, biggest impact on how likely it is the value of their pot “ that you’ll be able to retire early. at retirement could The good news is that pensions are a lot more flexible “be 64% higher than if than they were in the past. You they waited until age have more choice over what you 30 and made the same invest your money into, when you retire and how you access monthly payments. your funds.

HOW CAN I BOOST MY PENSION POT? The best thing you can do to prepare for retirement is to start saving early. This is because your money will benefit from investment growth

17 May 2018 | SHARES | 37 MONEY MATTERS Helping you with personal finance issues How young savers can bridge the intergenerational divide A new report calls for a £10,000 payment to over-25s and major changes to various parts of the tax system

he Resolution Foundation, a respected think-tank, has T published a report on the issue of intergenerational fairness, saying that younger generations – sometimes sweepingly referred to as ‘Millennials’ – will end up MILLENNIAL OPPORTUNITIES savers might have had to pay financially worse off than those While it is true the so-called 3% or more to invest through a who went before them unless ‘Baby Boomers’ enjoyed certain pension. Nowadays there is a something radical is done. advantages that generations huge choice of low-cost platforms The report argues younger following are unlikely to that charge as little as 0.25%. people will struggle to own experience, it’s important to Furthermore, the rise of cheap their own home or build up a recognise this is not a one way tracker funds means you are able retirement pot as valuable as street – particularly when it to invest in stocks and shares for their parents’, many of whom comes to saving for retirement. a total cost of less than 0.5%. benefited from lower house While some Baby Boomers The difference this could make prices and generous employer- were lucky enough to get to your retirement is enormous. sponsored ‘defined benefit’ (DB) DB pensions as part of their Someone paying in £100 a month pension arrangements. employment contract, historically for 40 years who enjoyed annual The Resolution Foundation’s there was no requirement on investment growth of 5% and headline recommendation would employers to offer any sort of paid charges of 3% would end up see those aged 25 and over given retirement provision at all – with a pot worth £74,000. £10,000 by the Government. meaning some will have saved If the same person paid This could be used for a limited little or nothing for old age. charges of 0.5%, their fund number of things deemed to be Today firms are required to would be a whopping £60,000 socially ‘good’, such as saving for offer a defined contribution (DC) bigger (£134,000). retirement, paying off debts or workplace pension and match Then there’s technology. As contributing towards a deposit on the first 2% employees pay in. well as dramatically lowering a first home. From April 2019 employers will the costs associated with Other ideas include drastically be required to pay in 3%, with investing, the rise of online and reducing the amount people can employees stumping up 4% (and now mobile tech allows you to inherit without paying any tax, another 1% coming through access a diverse range of assets levying National Insurance on tax relief). around the globe instantly. Older incomes over state pension age There have also been huge generations could barely have (with the money raised used to strides in value for money, dreamed of such things. boost NHS funding) and radically particularly when it comes to reforming pension tax relief so personal pensions. Tom Selby, everyone gets the same rate. Back in the 1980s or 1990s senior analyst, AJ Bell

38 | SHARES | 17 May 2018 EDUCATION How a stock’s liquidity can affect your returns What are bid/offer spreads, what do they mean for investors and what role do market makers play?

ost investors will current account can instantly Yet not all shares are as actively be familiar with the be in your hands when you traded as HSBC, particularly those Mcharges associated need it at essentially zero cost. A in small cap companies, and this is with trading stocks and shares. house is nowhere near as liquid where market makers come in. However, a hidden cost which by comparison. These are banks or stockbrokers sometimes isn’t given sufficient It can take several months to go who commit to trading shares prominence is the difference through the legal process involved and bonds to ensure you are between the price at which you with selling a house and if you’re always able to buy or sell a stock buy and sell a share, known as the looking for a quick sale this could on an exchange in normal market bid/offer spread. have a materially negative impact hours (8am-4.30pm). There are The bid price is the maximum on the price you get. 21 registered market makers with price that a buyer is willing to pay Shares as an asset class are the London Stock Exchange. for a share and the offer price fairly high up the liquidity scale (also called the ‘ask’ price) is the because they are traded by BEWARE THE SPREAD minimum price a seller is willing thousands of other investors on The bid/offer spread is effectively to receive. the stock market. where a market maker makes Almost 100% of the time the bid However, there are significant its money and if there are lots of price will be below the offer price. variations. Most large cap stocks market makers in a share then The size of the difference (also have a sufficient number of competition will likely keep a known as the spread) is largely a investors who are willing to buy lid on the spread. However, if function of how liquid a stock is. and sell so liquidity isn’t an issue. there are just one or two market The liquidity of any asset This means there is typically makers in a stock the spread can essentially reflects how quickly very little difference between be wide. an asset can be converted into the price at which you can buy Taking micro-cap mining ready cash and what impact this and sell a stock. For example, firm Weatherly International has on the price received. the bid/offer spread on banking (WTI:AIM) as an example, at the giant HSBC (HSBA) shares is just time of writing the bid price on CASH IN HAND 0.1p and would have a negligible the shares was 0.25p and the In real world terms cash in a impact on your return. offer price at 0.3p – so the spread is 16.7%. These figures imply you would pay 0.3p to buy the shares and get 0.25p if you tried to sell them – so theoretically you would have lost money as soon as your initial buy order is placed. You would need the bid price to increase by 20% to 0.3p just to stand a chance of breaking Weatherly International’s bid price would have to increase by 20% just to break even should you want to sell even should you wish to sell. (TS)

17 May 2018 | SHARES | 39 LARGER COMPANIES Why Provident Financial’s shares are still erratic We explain what’s going on and reveal the views of several investment experts

hen Provident Financial (PFG) lost 70% of its value last August, it was the biggest Wone day fall in FTSE 100 history. In a strange event for the-now FTSE 250 company, its value soared by 70% on 27 February 2018 when the company revealed its Financial Conduct Authority (FCA) fines were not as high as expected. Since then, its shares have been moving wildly up and down. So why are the shares continuing to behave in an erratic fashion? The root of Provident’s spectacular fall from grace was the changes made to its home credit business. Its decision to replace self-employed (FCA investigation and lack of funding) have debt collectors with fewer ‘customer experience been ‘neutralised’. Provident says it will also managers’ did not go down well. Its 2017 results reinstate its dividend this year after scrapping showed a £117m loss for the division, compared to payments in 2017. a £115m profit for 2016. The company’s recent trading update said its The company’s £331m rights issue announced home credit business was recovering well but not in February 2018 was less than the £500m everyone is sure that Provident Financial is out of thought to be needed to repair the balance sheet the woods just yet. and compensate customers over the Vanquish Donald Tait, analyst at investment bank repayment option plan. Berenberg, says there remain risks to earnings Provident needed £170m to compensate its forecasts from the company’s Vanquish and customers plus a £2m fine to the FCA itself. More Moneybarn divisions. These are the company’s cash was also used to pay off its Moneybarn credit card and motor finance segments liabilities, a division which had also been under respectively. investigation by the FCA. He is also concerned that growth at Vanquish The rest of the money, about £108m, was used to may not outpace margin contraction and also sees shore up the company’s funding gap which puts it on execution risk in the home credit business. a much surer footing than it had been previously. Rupert Rucker, head of income solutions Liberum analyst Portia Patel says the group at Schroders, recently invested in Provident can now focus on recovery as the two risks for Schroder Income Maximiser Fund PROVIDENT FINANCIAL (GB00B0HWJ904) saying the company has a FTSE ALL SHARE 750 robust balance sheet and he thinks the business 700 will recover. Analysts are also divided on whether the shares 650 are worth buying at current levels. There are five 600 ‘buy’ ratings, seven at ‘hold’ and one ‘sell’ rating, 550 according to Reuters database. Three months ago 500 the figures were the same apart from there were 450 three ‘sell’ ratings, which suggests two analysts 400 Source: Thomson Reuters Datastream NOV DEC JAN FEB MAR APR MAY have since discontinued coverage. (DS)

40 | SHARES | 17 May 2018 SMALLER COMPANIES Vertu’s shares look really cheap given its very strong asset backing

Contrarian investors should hop behind the wheel at the UK’s sixth largest car seller

e believe the market is taking too September create short-term uncertainty gloomy a view of franchised over new vehicle supply. W motor dealerships operator 3.3% Strongly cash generative and buying back Vertu Motors (VTU:AIM) and that a PROSPECTIVE shares which it believes are undervalued – 48.75p share price provides a bargain DIVIDEND tangible net assets per share grew almost entry point for investors. YIELD 15% to 45.4p in the most recent financial The company’s single digit price-to- year – Vertu upped the dividend 7.1% to earnings ratio (PE) is too pessimistic a rating 1.5p and also closed the year with a better given the improving prospects of the UK’s sixth than expected £19.3m net cash position. largest car retailer. One-off property profits of £3.5m struck during Vertu boasts a pristine balance sheet rich the year attest to the value in Vertu’s freehold and in property assets. It outperformed a tough long leasehold portfolio. automotive retail market in March and April. And while no acquisitions were made in the period, Canaccord Genuity has upgraded its price target chief executive Robert Forrester insists the acquisition from 57p to 66p following in-line full year results pipeline is improving with smaller dealership vendors (9 May). These revealed a 9.2% underlying pre-tax becoming more realistic on pricing. profit reverse to £28.6m amid pressure on new car In his words, Vertu has ‘a brilliant balance sheet’, sales and used car margins. with a £40m of committed borrowing capacity and Performance in new and used vehicles was down potential to add a further £30m if need be, leaving year-on-year in a difficult UK auto retail sector hurt it well positioned to fund future acquisitions. by sterling weakness, frail consumer confidence For the year to February 2019 and excluding and mixed government messages about the future any potential earnings accretive acquisitions, of diesel vehicles. Canaccord Genuity analyst Sanjay Vidyarthi However, Canaccord draws confidence from forecasts pre-tax profit to decline to £26.6m, ahead Vertu’s more positive outlook. The £183.6m cap’s of recovery to £28.8m in 2020 and £30.8m in 2021. board says the prospects for the UK new car Based on the current financial year’s 5.5p earnings market are likely to be more favourable and the estimate, with a 1.6p dividend also forecast, Vertu outlook for used cars is strong, while aftersales trades on a low forward multiple of just 8.9-times, prospects are positive. leaving plenty of potential re-rating scope. Nonetheless it says new regulations in SHARES SAYS:  VERTU MOTORS We’re buyers at 48.75p. Bull points include Vertu’s FTSE ALL SHARE 52 management and strong balance sheet and, 50 despite the noise around Brexit challenges and 48 UK new car sales, it is worth noting more than 70% 46 of Vertu’s gross profit is generated from used cars 44 and recurring, high margin aftersales. (JC) 42 BROKER SAYS: 011 40 Source: Shares, Thomson Reuters Datastream 2017 2018

17 May 2018 | SHARES | 41 SMALLER COMPANIES Next Fifteen’s superior performance still has legs Marketing firm should be able to ride out short-term negativity towards the tech space

arketing firm Next Fifteen WHAT ARE THE RISKS TO GROWTH? Communications (NFC:AIM) A potential to risk for investors to weigh Mis one of AIM’s big success 112% is the level of customer concentration. stories of recent years. Despite a REVENUE Its top 33 clients account for more recent shift in sentiment towards GROWTH BETWEEN than 40% of revenue so the loss of the tech industry which it serves we 2013 AND 2018 one of these key customers could believe the small cap’s innovative have a material impact – against this it Source: approach could deliver further upside Next Fifteen is worth noting the business has never in the years to come. lost a top-20 client since its inception. In the last five years shares in the The market’s attitude to the US tech £374m business have delivered a total return sector has soured somewhat of late, largely of 460% thanks to organic growth and relating to over-inflated valuations. While this judicious acquisitions. is unlikely to impact on marketing spend, Results for the 12 months to 31 18% the same cannot be said if there is January 2018 illustrate the ongoing ADJUSTED increased regulation. achievements with adjusted pre-tax RETURN ON CAPITAL Next Fifteen chief executive profit up 21% to £29.3m. The rate of Tim Dyson says the company is organic growth was down slightly at EMPLOYED POST increasingly shifting from a simple 5.3% but the company attributed this TAX IN 2018 marketing role to using data and result to political uncertainty in the Source: technology to improve the companies first half of its financial year. Next Fifteen it works for, so ‘rather than just putting The share price strength means it lipstick on the pig, (we’re) helping to commands a premium equity valuation. At redesign the pig itself’. 489p it trades on a consensus forward price-to- With a net debt to earnings ratio of 0.3-times earnings ratio of 15 against an average of 14.08 and a £40m credit facility in place, Next Fifteen for a Thomson Reuters-compiled peer group. Next has plenty of scope to make further bolt-on Fifteen will need to continue to deliver superior acquisitions to continue this transition. growth in order to maintain this premium rating. NEXT FIFTEEN COMMUNICATIONS The company’s client base includes the likes FTSE ALL SHARE 500 of Amazon Facebook, Google’s parent company 450 Alphabet and IBM. More than 50% of its revenue 400 comes from the US. 350 300 250 200 150 100 50 Source: Thomson Reuters Datastream 2013 2014 2015 2016 2017 2018 SHARES SAYS:  We remain fans. (TS)

BROKER SAYS: 003

42 | SHARES | 17 May 2018 NEW TAX YEAR MEANS NEW INVESTMENT OPPORTUNITIES Are you looking for new companies to invest in? Come and join Shares at its evening event in London on Wednesday 6 June 2018 and meet directors from Diurnal and Midatech Pharma with more to be announced.

Sponsored by London – Wednesday 6 June 2018

Companies presenting

Diurnal Martin Whitaker, CEO Founded in 2004, Diurnal is a UK-based, globally-focused specialty pharma company developing high quality products for the life-long treatment of chronic endocrine conditions. It is committed to addressing major unmet clinical and patient needs in hormone replacement, initially by developing and marketing products for the rare orphan diseases Congenital Adrenal Hyperplasia (CAH) and Adrenal Insufficiency (AI). Diurnal’s expertise and innovative research activities focus on circadian- based endocrinology (mimicking the body’s natural hormone levels), which has yielded novel product candidates being trialled in patients prior to the submission of a marketing authorisation application.

Midatech Pharma Speaker TBC Midatech is a nanomedicine company focused on the development and commercialisation of multiple, high-value, targeted therapies for major diseases with unmet medical need. It is advancing a pipeline of novel clinical and pre-clinical product candidates based on its proprietary drug conjugate and sustained release delivery platforms with a clear focus on the key therapeutic areas of diabetes, cancer and neuroscience/ophthalmology. Midatech’s strategy is to develop its products in-house in rare cancers and with partners in other indications, and to accelerate growth of its business through strategic acquisition of complementary products and technologies. And more to be announced.

Follow this link www.sharesmagazine.co.uk/events for full details.

REGISTER FOR YOUR COMPLIMENTARY TICKET TODAY

During the event and afterwards over drinks, investors Event details will have the chance to: Location: Novotel Tower Bridge, London EC3N 2NR

Discover new investment opportunities Registration 18:00 Presentations to start at 18:30 Complimentary drinks and buffet available after the presentations Get to know the companies better Contact

Chris Williams, Spotlight Manager Talk with the company directors [email protected] and other investors 020 7378 4402

Register free now www.sharesmagazine.co.uk/events WEEK AHEAD

NEX NXG EX-DIVIDEND FRIDAY 18 MAY Pets At Home PETS Advanced Medical INTERIMS Warehouse REIT WHR Solutions AMS 0.75p AstraZeneca AZN INTERIMS Avingtrans AVG 1.3p TRADING STATEMENTS Greencore GNC Balfour Beatty BBY 5.38p Hikma HIK Shaftesbury SHB Bunzl BNZL 32p MONDAY 21 MAY Watkin Jones WJG Bellway BWY 48p FINALS UDG Healthcare UDG FDM FDM 14p McKay Securities MCKS Oxford Biodynamics OBD Filta FLTA 0.65p LXI REIT LXI Renew RNWH Gattaca GATC 3p TUESDAY 22 MAY Topps Tiles TPT Gym Group GYM 0.9p FINALS TRADING STATEMENTS Hill & Smith HILS 20.6p Schroder Real Estate Close Brothers CBG Huntsworth HNT 1.45p Investment Trust SREI ECONOMICS Howden Joinery HWDN 7.5p Big Yellow BYG UK Kape Technologies KAPE 3.55p Scapa SCPA PPI Manx Telecom MANX 7.5p Intermediate Capital ICP RPI Mincon MCON €0.01 1Spatial SPA CPI Midwich MIDW 9.65p Entertainment One ETO HPI John Menzies MNZS 14.5p Homeserve HSV WEDNESDAY 23 MAY WM Morrison MRW 4.43p First Derivatives FDP FINALS WM Morrison MRW 4p Bloomsbury BMY Marks & Spencer MKS Premier Global Cranswick CWK Vedanta Resources VED Infrastructure Trust PGIT 2p Halfords HFD HICL Infrastructure HICL SOCO SIA 5.25p OptiBiotix Health OPTI Spectris SXS 37.5p Dairy Crest DCG Ten Entertainment TEG 7p Great Portland Estates GPOR Town Centre Securities TOWN 3.25p Severn Trent SVT Venture Life VLG 0.04p Babcock BAB Whitbread WTB 69.75p Assura AGR Click here for complete diary INTERIMS www.sharesmagazine.co.uk/market-diary ZPG ZPG Britvic BVIC Hollywood Bowl BOWL IXICO IXI Stride Gaming STR EasyHotel EZH GIVEN BLEAK high street Sanderson SND conditions and the market share THURSDAY 24 MAY gains being secured by online FINALS pure-play retailers, expectations United Utilities UU. are subdued ahead of Marks & NewRiver REIT NRR Spencer’s (MKS) full year results Electrocomponents ECM (23 May). Investors will be Mediclinic MDC looking to see if the changes by QinetiQ QQ. CEO Steve Rowe, supported by Helical Bar HLCL non-executive chairman Archie Wizz Air WIZZ ENGINEERING SUPPORT services Norman, are improving the British Renewi RWI company Babcock (BAB) buoyed retail institution’s performance. Tate & Lyle TATE its investors with an upbeat Forward guidance from Marks & Caledonia Investments CLDN trading update in February. Spencer, which has carried out a PayPoint PAY Will this positive sentiment be senior management overhaul, will TalkTalk TALK maintained when it releases also be keenly watched. Ahead of INTERIMS full year results on 23 May? In the figures, broker Shore Capital Daily Mail & General Trust DMGT February the company said both calls for improved adjusted Shoe Zone SHOE earnings and cash conversion pre-tax profit of £593.2m (2017: Paragon Banking PAG would be in line with guidance £584.5m) and a maintained TRADING STATEMENTS and that its debt to earnings ratio dividend of 18.7p. Kingfisher KGF would be reduced to 1.7 times.

44 | SHARES | 17 May 2018 INDEX

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KEY Diageo (DGE) 21, 22 LF Livingbridge UK 29 Royal Dutch Shell 14, 26 Micro Cap Fund (RDSB) • Main Market Euromoney (ERM) 3 (GB00B55S9X98) • AIM Fidelity UK Smaller 20 Royal London UK 22 Liontrust Special 19, 21 Equity Income M Inc • Fund Companies W Acc Situations I Inc (GB00B3M9JJ78) • Investment Trust (GB00B7VNMB18) (GB00B57H4F11) Fidessa (FDSA) 21 Royal London 24 Man GLG Continental 23 UK Mid-Cap Filta (FLTA:AIM) 30 888 (888) 7 European Growth Growth M Acc Finsbury Growth & 22 Aberdeen Frontier 27 C Professional (GB00B5BRW420) Income (FGT) Markets (AFMC) (GB00B0119487) Ryanair (RYA) 23 Footasylum 30 Angling Direct 8 Marks & Spencer 44 (FOOT:AIM) (ANG:AIM) (MKS) Auto Trader (AUTO) 12 Mattioli Woods 30 (MTW:AIM) Avesoro Resources 16 (ASO:AIM) Melrose Industries 10 (MRO) Babcock (BAB) 44 Merchants Trust 26 BAE Systems (BA.) 14 (MRCH) Schroder Income 40 Baillie Gifford 23 Gama Aviation 30 Next Fifteen 42 Maximiser Fund Japanese B Acc (GMAA:AIM) Communications (GB00B0HWJ904) (GB0006011133) GKN (GKN) 10 (NFC:AIM) Sportech (SPO) 7 BBA Aviation (BBA) 24 GoCompare (GOCO) 3 Paddy Power 7 Stewart Investors 20 BlackRock 26 GVC (GVC) 7 Betfair (PPB) Asia Pacific Commodities Income Hargreaves Lansdown 22 Sustainability B GBP (BRCI) (HL.) Acc (GB00B0TY6V50) BlackRock 19, 21 HSBC (HSBA) 39 Unilever (ULVR) 21 European Dynamic D Utilico Emerging 27 Acc (GB00B5W2QB11) Ideagen (IDEA:AIM) 14 Markets (UEM) BlackRock Frontiers 27 Impax Asset 30 Vertu Motors 41 (BRFI) Management (IPX:AIM) (VTU:AIM) Invesco Perpetual 24 BP (BP.) 26 Provident Financial 40 Global Smaller Virgin Money (VM.) 8 BT (BT.A) 10 (PFG) Companies Z Acc Weatherly 39 (GB00B8N46D97) Purplebricks 3 International (PURP:AIM) JD Sports Fashion 30 (WTI:AIM) (JD.) RELX (REL) 3, 22 Webis (WEB:AIM) 7 Just Eat (JE.) 3 Rightmove (RMV) 3, 12, William Hill (WMH) 7 21 LF Lindsell Train 19 XP Power (XPP) 16 CYBG (CYBG) 8 Riverstone Energy 26 UK Equity Acc YouGov (YOU:AIM) 21 Dechra 24 (GB00B18B9X76) (RSE) ZPG (ZPG) 3, 12 Pharmaceuticals Royal Bank of 6, 8 (DPH) Scotland (RBS)

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