Factsheet

Investment Objective

The aim of the Smithson Equity Fund ("Fund") is to achieve long-term (over 5 years) growth in value through exposure to a diversified portfolio of shares issued by listed or traded companies.

The Fund will invest in shares issued by small and mid-sized listed or traded companies globally that (at the time of initial investment by the Fund) have a market capitalisation within the range of the constituents of the MSCI World SMID Index. The Fund is not limited to investing in companies which are constituents of the MSCI World SMID Index. The Fund's approach is to be a long-term investor in its chosen shares. It will not adopt short-term trading strategies.

The Fund has stringent investment criteria which the ACD adheres to in selecting securities for the Fund's investment portfolio. These criteria aim to ensure that the Fund invests in high quality businesses, which in the opinion of the ACD are those:

• that can sustain a high return on operating capital employed;
• that generate substantial cashflow;
• that have a clearly identifiable source of secular growth (growth that is driven by long-term forces in the market, rather than short-term, cyclical change) to enable retained cash to be invested at a high rate of return;
• whose advantages are difficult to replicate;
• which do not require significant leverage to generate returns;
• that are resilient to change, particularly technological innovation; and
• whose valuation is considered by the ACD to be attractive. 

The Fund will not invest in derivatives and will not hedge any currency exposure arising from within the operations of an investee business nor from the holding of an investment denominated in a currency other than sterling.

Principal Risks

• Small and mid-size cap risk: The Fund may invest in small and mid-size companies. These companies may be more sensitive to changes in economic conditions and their shares may be less liquid and more volatile than those of larger, more established companies. As a result, the value of the Fund may fluctuate more significantly over short periods.
• Concentration risk: The investment criteria adopted by the Fund significantly limits the number of potential investments. The Fund generally holds 25 to 40 stocks and so it is more concentrated than many other funds. This means that the performance of a single stock within the portfolio has a greater effect on the price of the shares of the Fund.
• Performance risk: Investors are reminded that risk levels will depend on individual investment selections made by the Fund. There is no guarantee that these selections will achieve the desired results, and the Fund may not perform in line with its objectives or the wider market.
• Currency risk: The Fund's portfolio is a global share portfolio and many of the investments are not denominated in Sterling. There is no currency hedging in place and the price of shares in the Fund may therefore rise or fall purely on account of exchange rate movements.

Performance

Once this fund has been in existence for a full twelve month period, past performance information will be shown here.