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Private investors

Artemis UK Special Situations 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 fund aims to provide long-term capital growth by exploiting special situations. The fund invests principally in UK equities and in 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)573.97p
Offer price (acc units)609.24p
Historic yield (acc units)1.51%

Investment information
(class R)

Minimum lump sum investment£1,000
Ongoing charge (acc units)1.56%

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

We have mentioned before that we expect takeovers to pick up. In March we saw bids for two of our holdings. Bovis, which we mentioned last month, has received approaches from two companies. Both were attracted by its land bank and its modest valuation. One potential acquirer has dropped out and we await news from the other. Our current holding is modest, and should no deal be forthcoming we will use any weakness to add to the position. We also received an offer for Amec from Wood Group. Amec is in the midst of a turnaround and the timing of the bid was surprising to us, and - judging by its share price - to Wood Group’s shareholders. After an initial bounce both shares have drifted. On basic savings to operating costs the deal is highly accretive and this will insulate the combined entity if trading remains subdued. If it goes through it creates an oil services company with greater technical expertise and broader exposure. We have used the weakness to start buying Wood, which offers potential upside from the current valuation.

2017 has so far not been the best of years for BT.

Spirent produced good results during the month, with strong growth in ethernet testing offsetting pressure in wireless. The company has spent the last two years investing in new products and we now expect these to start contributing to growth. We assume the directors are also anticipating better things given the number of shares they have bought recently. We also had good results from ITV, accompanied by a special dividend. The company is still investing in its studios and this is producing a strong portfolio of programming. The advertising market remains uncertain because of Brexit but recent concerns about online advertising could push business back to television. Overall, the shares remain modestly valued for a company with significant content and share of the TV market. During the month Cobham announced its long-awaited rights issue. As noted in last month’s report, we have been buying the shares and will be supporting the rights issue.

2017 has so far not been the best of years for BT. But during the month two important regulatory issues were clarified. First, the ownership and structure of the Openreach business was finalised. We believe the outcome on this is fair and reasonable: Openreach will remain within BT’s corporate structure but will be a distinct legal entity with its own board. Second, wholesale pricing for access to the broadband network and targets for its performance were announced. Overall they were roughly as expected with a bit of pressure on pricing and tougher targets. We hope this now gives more clarity on the company’s regulatory position and allows shareholders to have a more profitable experience for the rest of the year.

04 November 2016

Derek Stuart: We buy stocks, not the market …

Although economic risks are rising, the UK market has been too. Although overall valuations are looking stretched, this conceals considerable opportunities, according to Artemis’ Derek Stuart.

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

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

Data from 9 March 2000. 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)

12 months to 31 March12.2%0.9%-0.7%16.7%19.7%
12 months to 31 March12.2%0.9%-0.7%16.7%19.7%
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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Derek Stuart: We buy stocks, not the market …

Security Code

About the fund

The Artemis UK Special Situations Fund aims to achieve superior long-term growth by looking for unrecognised growth potential in companies, often those that are unloved or out-of-favour.

  • Unrecognised opportunities: ‘special situations’ are companies that are in recovery, need re-financing or are suffering from investor indifference. The manager views ‘problem investments’ as potential opportunities and looks for hidden value. They often have the potential to deliver significant capital growth.
  • Favours smaller and medium-sized companies: because these sizes of companies are often under-researched by the broader investment community, detailed research in this area of the market can identify growth opportunities and valuation anomalies.
  • Meeting management: personal knowledge of management teams aids the managers’ understanding of what might be achieved by the companies in which they invest. A direct match of the interests of company management and the company’s shareholders is an important consideration.
  • Flexible approach: the managers are free to invest across the range of company sizes, allowing them to select only those stocks which they feel offer strong capital growth potential. The fund typically holds 60-70 stocks.
  • Experienced team: managers Derek Stuart and Andy Gray have many years’ investment experience between them. Derek is a co-founder of Artemis and has managed the fund since its launch in March 2000.

Reasons to consider

The fund may be suitable for investors looking for:

  • the potential for capital growth
  • exposure to the growth potential of companies in turn-around situations
  • exposure to smaller and medium-sized UK companies
  • experienced fund managers with a good long-term track record

Introducing the fund

Derek Stuart introduces the Artemis UK Special Situations 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 in UK companies that are going through difficult times but which the managers believe can be successfully and profitably resolved. They carefully scrutinise the companies before investing, looking for those that will deliver good returns over the longer term.
  • Many of the fund’s investments will be in smaller or medium-sized companies, which can be more vulnerable to financial or operational failure than larger, more established businesses.
  • 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 fall.
  • This fund’s ‘SRRI’ risk rating, a measure of how volatile the fund’s performance has been over time, is currently 5, 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

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.
FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trademark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE data is permitted without FTSE’s express written consent.

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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