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UK Multi-Cap strategy - Investors continued to focus on improving economic data

  • 14 July 2020 (7 min read)

Key points:

  • Global equity markets rise in June
  • Ongoing monetary and fiscal stimulus continue to be supportive
  • UK GDP1  showed signs of recovery as the month progressed
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What’s happening?

Global equity markets rose again in June as investors continued to focus on improving economic data resulting from the easing of lockdown restrictions. Volatility remained elevated, however, as global stock markets fluctuated between ‘risk on’ and ‘risk off’. Plenteous ongoing monetary and fiscal stimulus continued to support asset prices and maintain broader liquidity. Expectations of a swift economic recovery will depend on any rise of new Coronavirus cases not leading to additional, widespread societal lockdown.

UK equity markets rallied strongly at the start of June, before falling back towards the end of the month as concerns grew over a second wave of Coronavirus cases. Economic data remained volatile with a confirmed 20.4%2 fall in UK GDP during April 2020 showing signs of recovery as the month progressed.

Portfolio positioning and performance

The UK Multi-Cap strategy has continued to perform positively. The strategy performed in line with the FTSE All-Share Index over the month of June. Stock selection contributed positively to performance. Positive stock performances of note include holdings in Dunelm, a home furnishing retailer, and Chemring, a manufacturer of technology products and services for the aerospace and security markets. Dunelm has benefitted from the accelerated shift to online due to the pandemic. Chemring’s share price rose in the month after reporting better than expected business in the first half of financial 2020. Detractors on a relative basis included Future, Clinigen and Rightmove.

A new holding was taken in Silence Therapeutics, a biotechnology company that develops gene therapeutic technology based on ribonucleic acid (RNA) interference. Its proprietary technology can selectively inhibit any gene in the genome, specifically silencing the production of disease-causing proteins.


The equity market is likely to remain volatile as the forces of Central Bank stimulus, Government support and the economic impact of increasing or decreasing Covid-19 cases battle for supremacy.

UK economic output should continue to improve as businesses reopen and welcome back furloughed staff. The UK economy has had to absorb a significant shock and continues to be supported by government and Central Bank policy. As ever, there will be winners and losers as the long term changes to individual behaviours impose themselves.

We remain focused on UK and internationally-exposed businesses, where the fundamental profit drivers remain entrenched and equity holders benefit from the capital allocated and risks taken by management. We continue to believe that a rewarding strategy is to actively invest in UK-listed companies that are compounding their earnings and dividends, where corporate governance is world leading, where contract law and title law are dependable, and where company management teams are permanently accessible.

No assurance can be given that the UK Multi-Cap Strategy will be successful. Investors can lose some or all of their capital invested. The UK Multi-Cap strategy is subject to risks including; Equity; Smaller companies risk; Liquidity risk; Investments in small and/or micro-capitalisation universe; Investments in specific countries or geographical zones.

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