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Smith & Williamson Enterprise
Smith & Williamson Enterprise is a long/short equity fund (it makes money from falling, as well as rising share prices), which invests primarily in the UK. The fund has been designed with the intention to deliver 8-10% per annum but with half the volatility of the UK equity index, therefore providing equity-like performance, but with fewer ups and downs. The managers use a wide range of trusted sources to identify investment themes and stock ideas, and it is these that drive performance. This fund has a performance fee.
Our opinion
Unlike many other equity long/short funds, the managers of Smith & Wiliamson Enterprise generally don't use ‘futures’ (contracts for shares bought at an agreed price, but delivered and paid for later) to provide their short exposure (when they are hoping to make money from falling share prices), as they feel these are a bit of a blunt instrument. Also, their shorts aren't just used to dampen volatility but are genuine sources of added value for investors. This strategy has seen the short side of the fund perform well, even in rising markets. This is reasonably rare and obviously a huge plus for this type of portfolio. While it has been slightly more volatile than some of its peers, we feel this added risk is more than justified by the returns.
Company description
Smith & Williamson was founded in Glasgow in 1881 and has grown and evolved over the years to offer a wide range of complementary services. Among the ten largest firms of accountants in the UK, it has more than 1,700 employees based in 12 offices, of which about one third work in the investment management and banking division.
Fund manager
Lead manager Mark Boucher has been running Smith & Williamson Enterprise since January 2013, alongside co-managers Rupert Fleming and Mark Swain. Mark joined the company in 2006 as co-manager of this fund, left in 2009 for four years working for an American company running very similar strategies, and returned in 2013. Rupert and Mark Swain joined the company in 2005, both previously having worked at Leopold Joseph/Bank of Butterfield. Collectively, the team has over 40 years' experience investing in the UK stock market.
Data makes your briefcase heavy, insight makes you money.
Rupert FlemingFund manager
Investment process
Over their years in the investment industry the managers have built up a network of trusted brokers and analysts from whom they source ideas. These analysts - often sector specialists - can provide useful insight to help the managers generate ideas and identify investment themes, both long and short, that can be exploited before the wider market. Put into practice, this has seen the managers get some big calls right, including shorting the banks in 2008 and profiting from the supermarkets' fall from grace in 2014.
Risk
Self-imposed risk controls include maintaining a diverse portfolio of around 70 stock positions, with large-cap positions restricted to a maximum of 5%. Small and mid-cap positions are capped at 2% and only 10% of the Smith & Williamson Enterprise portfolio will be in small caps for liquidity reasons. While the fund should have lower risk than an equivalent long-only equity fund, it is more volatile than most other absolute return funds.
Read more about this fund
The information, data, analyses, and opinions contained herein (1) include the proprietary information of FundCalibre, (2) may not be copied or redistributed without prior permission, (3) do not constitute investment advice offered by FundCalibre, (4) are provided solely for informational purposes and therefore are not an offer to buy or sell a fund, and (5) are not warranted to be correct, complete, or accurate. FundCalibre shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, this information, data, analyses, or opinions or their use. The Elite Fund rating is subjective in nature and reflects FundCalibre’s current expectations of future events/behaviour as they relate to a particular fund. Because such events/behaviour may turn out to be different than expected, FundCalibre does not guarantee that a fund will perform in line with its FundCalibre benchmark. Likewise, the Elite Fund rating should not be seen as any sort of guarantee or assessment of the creditworthiness of a fund nor of its underlying securities and should not be used as the sole basis for making any investment decision. FundCalibre disclaims any responsibility for trading decisions, damages or other losses resulting from any use of the Elite Fund rating. All performance data, as well as fund size, OCF, AMC, annual income (historic), share price discount or premium, is sourced directly from FE Analytics, and will change periodically.