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Shares I Love: Alpha FX

Alpha FX is benefiting from increased demand because the global economy has become more integrated
Shares I Love: Alpha FX
  • Alpha FX provides foreign exchange currency and risk management services
  • The company has good technology and customer service

Katen Patel, co-manager of JPMorgan UK Smaller Companies Investment Trust (JMI), explains why he invests in foreign exchange services provider Alpha FX (AFX).

"The UK smaller companies market is filled to the brim with exciting investment opportunities, many of which are more exposed to attractive future growth drivers than larger companies in the FTSE 100 index. This under-researched part of the market provides investors with access to a more innovative range of fast-growing companies which are able to adapt and pivot in times of uncertainty, particularly compared to larger, more rigid and established companies.

"Although the past few years have been a mixed bag for UK small caps, with market uncertainty impacting domestically focused UK stocks particularly hard, long-term performance has been healthy. Today there is wide recognition that UK smaller companies have become substantially undervalued. This could offer an attractive buying opportunity for active managers looking for tomorrow's market winners in a diverse range of sectors.

"One such opportunity is Alpha FX, a financial services company which provides corporate foreign exchange currency and risk management services to companies across the world. Alpha FX enables organisations to undertake instant enterprise scale cross-border transactions with customers or suppliers while simultaneously mitigating foreign exchange risk. There has been increasing demand for these services as the global economy has become more integrated in recent decades.

"Alpha FX stands out because of its technology and customer service-led approach in what has historically been a poorly served sector. As a result, the company has grown its client base 10-fold and revenue per client fivefold in the past 10 years. Clients are supporting Alpha FX by expanding their reach and setting up across the globe, which should continue to drive the company's revenue growth for many years to come.

"Also, since Alpha FX's initial public offering in 2012, its results have consistently beaten market expectations."

Alpha FX was JPMorgan UK Smaller Companies Investment Trust's largest holding at the end of April, accounting for 4.09 per cent of its assets.