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Smith & Williamson Enterprise

Elite Rated by FundCalibre

This product is a long/short equity fund which invests primarily in the UK. The fund has been designed with the intention to deliver 8-10% per annum but with half the volatility of the UK equity index, therefore providing equity-like performance but with fewer ups and downs. The managers use a wide range of trusted sources to identify investment themes and stock ideas, and it is these that drive performance.

Company Description

Smith & Williamson was founded in 1881. They have over 1,400 people based in offices in the UK and Ireland, of which about one third work in the investment management and banking division. They hold over 10 offices across UK, Ireland and Jersey.

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Fund Manager

Lead manager Mark Boucher has been running this fund since January 2013, alongside co-managers Rupert Fleming and Mark Swain. Boucher joined the company in 2006 as co-manager of this fund, left in 2009 for four years working for an American company running very similar strategies, and returned in 2013.

Fleming and Swain joined the company in 2005, both previously having worked at Leopold Joseph/Bank of Butterfield. Collectively, the team has over 40 years’ experience investing in the UK stock market.

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Data makes your briefcase heavy, insight makes you money.

Mark Boucher, Rupert Fleming & Mark Swain - Fund Managers

The Investment Process

Over their years in the investment industry the managers have built up a network of trusted brokers and analysts from whom they source ideas. These analysts, often sector specialists, can provide useful insight to help the managers generate ideas and identify investment themes, both long and short, that can be exploited before the wider market. Put into practise, this has seen the managers get some big calls right, including shorting the banks in 2008 and, more recently, profiting from the supermarkets’ fall from grace in 2014.

Risk

Self-imposed risk controls include maintaining a diverse portfolio of around 70 stock positions, with large-cap positions restricted to a maximum of 5%. Small and mid-cap positions are capped at 2% and only 10% of the portfolio will be in small caps for liquidity reasons. While the fund is less risky than long-only equity funds, it is slightly more volatile than most other absolute return funds.

Our Opinion

Unlike many other equity long/short funds, the managers generally don’t use futures to provide their short exposure, as they feel these are a bit of a blunt instrument. Also, their shorts aren’t just hedges to dampen volatility but are genuine sources of alpha. This strategy has seen the short side of the fund perform well, even in rising markets. This is reasonably rare and obviously a huge plus for this type of vehicle. While it has been slightly more volatile than some of its peers, we feel this added risk is more than justified by the return.

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©2014 FundCalibre Limited. All Rights Reserved. The information, data, analyses, and opinions contained herein (1) include the proprietary information of FundCalibre, (2) may not be copied or redistributed without prior permission, (3) do not constitute investment advice offered by FundCalibre, (4) are provided solely for informational purposes and therefore are not an offer to buy or sell a fund, and (5) are not warranted to be correct, complete, or accurate. FundCalibre shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, this information, data, analyses, or opinions or their use. The Elite Fund rating is subjective in nature and reflects FundCalibre’s current expectations of future events/behaviour as they relate to a particular fund. Because such events/behaviour may turn out to be different than expected, FundCalibre does not ,guarantee that a fund will perform in line with its FundCalibre benchmark. Likewise, the Elite Fund rating should not be seen as any sort of guarantee or assessment of the creditworthiness of a fund or of its underlying securities and should not be used as the sole basis for making any investment decision. FundCalibre disclaims any responsibility for trading decisions, damages or other losses resulting from any use of the Elite Fund rating.