We when the stock selection process was in its early stages. Since launch, SVM UK Absolute Alpha has established a net long position, albeit cautiously, and the balance of the portfolio reflects fairly muted optimism on the part of fund manager, Colin McLean. The fund's long/short ratio for its FTSE 100 investments stands at 2.08:1.
The banking and insurance sectors have gradually come back into favour. Barclays, Aviva and HSBC all feature prominently within the portfolio, while new long positions have been established in Alpha Bank, Aegon and Bank of Cyprus. Although shares prices have risen in these sectors in recent months, many constituents are still trading on low price-to-book ratios. Mr McLean remains negative on both the utilities and support-services sectors, citing regulatory pressure and the imminent decline in government expenditure as the reasons for this stance.
The fund has yet to establish a meaningful track record, but it is built on solid foundations: SVM Asset Management was originally conceived as a launch pad for a range of offshore vehicles and hedge funds, but over time has brought its experience of this type of flexible investment model to the retail market. SVM UK Absolute Alpha is based on the Saltire hedge fund, which has been operating since 2002, although, as we pointed out in May, the risk provisions under the Ucits III (Undertakings for Collective Investments in Transferable Securities) legislation should render the Absolute Alpha Fund less volatile in terms of performance.
| PRICE | 103.4p | SHARPE RATIO | na |
| SIZE OF FUND | £21.5m | 1 MONTH PERFORMANCE | 0.68%* |
| No OF LONG POSITIONS | 44 | 3 MONTH PERFORMANCE | 2.77%* |
| No OF SHORT POSITIONS | 36 | 6 MONTH PERFORMANCE | 3.8%* |
| SET UP DATE | 11 Mar 09 | MANAGEMENT FEE | 1.50% |
| MANAGER START DATE | 11 Mar 09 | MAX. INITIAL CHARGE | 5.25% |
| BENCHMARK | 3-Mth Sterling LIBOR | MINIMUM INVESTMENT | £1,000 initial £200 additional |
| TRACKING ERROR | na | MORE DETAILS | svmonline.co.uk |
Source: SVM Asset Management & *Morningstar (3 October 2009)
Top Long/Short Positions (31/08/09)
| Holding | Percentage |
|---|---|
| Barclays Bank (L) | 2.4 |
| HSBC Holdings (L) | 2.1 |
| Aviva (L) | 1.9 |
| Infineon Technologies (L) | 1.7 |
| BAT Industries (L) | 1.7 |
| Next (S) | 1.4 |
| NGT | 1.3 |
| Northumbrian Water | 1.3 |
| Wellstream Holdings (S) | 1.2 |
| RPS Group (S) | 1.1 |
Gross exposure
| Segment | Percentage |
|---|---|
| Med/Mid 250 | 23.8 |
| FTSE 100 | 21.3 |
| Europe | 16.3 |
| Small/Smallcap | 5.7 |
| Fledgling/AIM | 1.2 |
| Cash | 31.7 |
