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Private investors

Artemis UK Smaller Companies Fund

All data as at 31 March 2017 except where specified
  • Summary
  • About the fund
  • Performance (class R)
  • Performance (class I)
  • Composition
  • Key facts
  • Investment insights
  • Literature
  • How to invest


The fund’s aims

The aim of the fund is to achieve long-term capital growth. The emphasis of the fund will be investment in smaller companies listed, quoted and/or traded in the UK and in smaller companies which are headquartered or have a significant part of their activities in the UK which are quoted on a regulated market outside the UK.

Current prices and yield
(class R)

As at noon, 21 April 2017
Bid price (acc units)1480.16p
Offer price (acc units)1586.63p
Historic yield (acc units)1.03%

Investment information
(class R)

Minimum lump sum investment£1,000
Ongoing charge (acc units)1.59%

The initial charge is currently waived. The ongoing charge includes the annual management charge of 1.5% and is shown as at the date of the Key Investor Information Document (KIID), where a full explanation of the fund's charges can be found.

Fund managers’ update

March was another good month for the fund, which rose by 3.5% and added to its outperformance over the year to date. It was a busy month for company results, most of which were either in line with or ahead of our expectations. Somero (which makes laser-guided machinery for levelling concrete) posted excellent figures again: sales grew by 13% and earnings by 23% on the year. Its ‘capital-light’ business model meant these earnings translated into a growing pile of cash which now exceeds $20m. This should carry on growing and we expect the company to return some of it to shareholders. Because we are conscious that Somero had become a very large weighting in the fund and it is both operationally geared and cyclical, we continued to trim our holding slightly.

It was a busy month for company results, most of which were either in line with or ahead of our expectations.

There was also good news from Games Workshop (fantasy miniatures), which stated that sales are still improving and profits are likely to grow significantly more than previously expected. XP Power's (power supplies) full-year results were good and orders increased. Although the upgrades to forecasts following these results were modest, we can see potential for more if current trading persists.

The only major disappointment in the month came from Centaur Media, where a decline in advertising sales accelerated into the new year. Lost advertising revenue means lost profit so analysts downgraded their forecasts. While this is negative in the short term, this underlines why the management is moving the company away from advertising and towards recurring subscriptions and events, a transition it is looking to accelerate.

In activity, we had a busier month than usual. We sold our remaining holding in STV, the Scottish television company. We felt its shares had risen to a level that fully reflected the opportunities for the company but perhaps overlooked some potential negatives - such as a worsening pension deficit, cyclical risks, talk of a second Scottish referendum and possible competition from a new BBC Scotland channel. We also reduced our holding in price comparison website Moneysupermarket.com after the prime minister hinted at a potential capping of energy prices. We fear this increases the risk of making consumers less likely to shop around online. We also sold our modest holding of wealth manager Rathbones. Its shares had performed well and are now highly rated. Although Rathbones is an excellent company, we prefer Brooks Macdonald, which is growing more quickly from a smaller base and is cheaper. We also continued to trim our holding in North Sea oil explorer Hurricane Energy after another successful discovery west of the Shetlands. Although this could be one of the largest oil finds in recent decades, the company will need to raise a lot of money to develop the project.

In purchases, we added to the holding in NCC we initiated last month. We also bought more Computacenter. Not only did its results indicate that trading in the current year has improved but they were followed by its directors buying shares, a vote of confidence that we always welcome. We added to the holding in Keller, the ground engineer. Although its results were as poor as we had expected, we also felt they should provide a good base to grow in the current year. The impact of recent losses in Asia Pacific will fade and the rest of the group is still trading satisfactorily.

Our main purchase was Medica which we bought at IPO. It is the leader in teleradiology: its pool of radiologists provides rapid analysis of X-rays, CT and MRI scans to many NHS trusts. This business tends to be very ‘sticky’, the market is only just beginning to use outsourcing and is growing rapidly. Although it remains early days, the shares are off to a flying start.

16 December 2016

Mark Niznik: Companies with pricing power …

The weaker pound has pushed up the price of imports. This will potentially put pressure on operating margins. Mark Niznik, a manager of the Artemis Smaller Companies Fund, talks about choosing companies that can pass on increased costs to their customers.

Value of £1,000 invested at launch to 31 March 2017

Value of £1,000 invested at launch to 31 March 2017

Data from 3 April 1998. Source Lipper Limited, accumulation units, bid to bid in sterling to 31 March 2017. All figures show total returns with dividends reinvested.

Asset allocation

Asset allocation

Source: Artemis as at 31 March 2017. Please note figures may not add up to 100% due to rounding.

Percentage growth (class R)

20172016201520142013
12 months to 31 March24.0%11.7%-2.0%18.3%21.8%
20172016201520142013
12 months to 31 March24.0%11.7%-2.0%18.3%21.8%
Please remember that past performance is not a guide to the future. Source: Lipper Limited, accumulation units, bid to bid in sterling. All figures show total returns with dividends reinvested.

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Mark Niznik: Companies with pricing power …





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About the fund

The Artemis UK Smaller Companies Fund harnesses the superior growth potential of smaller companies.

Its experienced manager uses fundamental research and company meetings to identify between 60 and 100 growing businesses that he believes will produce excellent risk-adjusted returns over the longer term.

  • Harnessing the power of smaller companies: research has shown that smaller companies tend to outperform their larger peers over the long term. The Artemis UK Smaller Companies Fund aims to exploit the ‘smaller companies effect’ by investing in stocks drawn from the bottom 10% of the UK market by value. 
  • Meeting management: manager Mark Niznik believes that a deep understanding of the companies is imperative for successful investing over the longer term. Company visits and careful assessment of management teams is a key element in his stock selection process.
  • Proven performer: launched in 1998, the Artemis UK Smaller Companies Fund has a strong long-term performance record. Mark Niznik has almost two decades’ experience of running smaller company funds.
  • A distinctive portfolio: a flexible approach to portfolio construction means that the fund’s largest holdings are those in which the manager has the highest degrees of conviction – not necessarily those that are largest in size.
  • Experience is key: Mark Niznik has many years experience in investing in smaller companies. Prior to joining Artemis in 2007, Mark analysed UK smaller companies as part of his role as a fund manager at Invesco Perpetual and then Standard Life.

Reasons to consider

The fund may be suitable for investors looking for:

  • the potential for capital growth
  • exposure to the growth potential of smaller companies
  • investment primarily in the UK
  • an experienced fund manager with a good performance record

Introducing the fund

Mark Niznik introduces the Artemis UK Smaller Companies Fund and outlines how he makes investment decisions.

Risk considerations

Before making an investment, investors should consider the level of risk they’re comfortable taking with their money.

  • This fund invests mostly in smaller and more recently established UK companies that the manager believes have strong growth potential.
  • These types of businesses can be more vulnerable to financial or operational failure. As a result, you should consider this a riskier investment than, for example, investing in long-established or larger companies.
  • Investors should also be aware that the usual risks of investing in stocks and shares apply – companies and stockmarkets can go through periods of turbulence and the value of your investment can go down.
  • This fund’s ‘SRRI’ risk rating, a measure of how volatile the fund’s performance has been over time, is currently 4, in a range of 1 (lower risk) to 7 (higher risk).

More detailed information on fund risks is included in the ‘risk warnings’ section below.

Risk warnings

To ensure you understand whether this fund is suitable for you, please read the Key Investor Information Document, which is available, along with the fund’s Prospectus, from artemis.co.uk.

The value of any investment, and any income from it, can rise and fall with movements in stockmarkets, currencies and interest rates. These can move irrationally and can be affected unpredictably by diverse factors, including political and economic events. This could mean that you won’t get back the amount you originally invested.

The fund’s past performance should not be considered a guide to future returns.

The fund may invest in the shares of small and medium-sized companies. Shares in smaller companies carry more risk than larger, more established companies because they are often more volatile and, under some circumstances, harder to sell. In addition, information for reliably determining the value of smaller companies – and the risks that owning them entails – can be harder to come by.

The historic yield reflects distribution payments declared by the fund over the previous year as a percentage of its mid-market unit price. It does not include any preliminary charge. Investors may be subject to tax on the distribution payments that they receive.

Any research and analysis in this communication has been obtained by Artemis for its own use. Although this communication is based on sources of information that Artemis believes to be reliable, no guarantee is given as to its accuracy or completeness.

Any forward-looking statements are based on Artemis’ current expectations and projections and are subject to change without notice.

Issued by Artemis Fund Managers Ltd which is authorised and regulated by the Financial Conduct Authority.

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