PFS Downing Active Management Fund (OEIC)

PFS Downing Active Management Fund

As of 1st December 2010, Downing LLP ("Downing) took on the Investment Management of the fund formerly known as CF Acuity Real Active Management Fund. In January 2011, the Fund transferred its ACD (Accredited COrporate Director) to Phoenix Fund Services. The Fund has been renamed PFS Downing Active Management Fund and the share prices can continue to be found daily in the Financial Times (or www.FT.com A Shares and B Shares) and Trustnet.

Factsheets outlining the main shareholdings of the Fund

• May 2012
• April 2012
• March 2012
• February 2012
• January 2012
• December 2011
• November 2011
• October 2011
• September 2011
• July 2011
• June 2011

How to invest

Download the Key Investor Information Documents and Application Form below

• Key Investor Information (A Accumulation Shares)
• Key Investor Information (B Accumulation Shares)
  
  
• Application Form (individual investor)
• Application Form (corporate investor)
  
  

• Shareholder letter

A new Manager, a new approach

A pro-active approach to investing in UK smaller companies
In December 2010, Downing LLP ("Downing") assumed the investment management for the PFS Downing Active Management Fund (previously CF Acuity RAM Fund). It is a specialist fund that invests in smaller quoted UK companies with up to £150 million market capitalisations. The PFS Downing Active Management Fund (the "Fund") takes an active approach to investments with "special situations" where the Investment Manager has the opportunity to influence change at the strategic level and create value for investors.

What is the PFS Downing Active Management Fund?
The Fund is an Open Ended Investment Company ("OEIC"), which takes advantage of the inefficiency of the smaller companies quoted markets. It invests in companies whose market values do not appear to reflect their intrinsic worth and where there is a clear route to an uplift in value. The Fund will use a proactive private equity investment style to identify and exploit the anomalies that it believes exist in these markets, with a view to providing long-term returns in excess of the capital growth that is typically achieved from UK small-cap equity funds.

Why invest in the smaller companies arena?
The bottom 10% of the main UK equity market by value posted their second consecutive year of superior returns in 2010*. The Hoare Govett Smaller Companies ("HGSC") Index delivered a total return of 26.4% compared to 14.5% for the FTSE All-Share Index. This continues a trend that has been in play since the March 2009 low in the market. Between March 2009 and the end of 2010, the FTSE All-Share returned an impressive 83.3%, but the HGSC Index delivered an uplift of 111.6%. However, smaller companies come with volatility. Despite greater returns in the last 2 years, in 2008 HGSC companies posted a total negative return of 39.6% which was nearly 10% worse than the FTSE All-Share. On balance though, over the full 56 year history of the HGSC, the index has beaten the annualised return of the FTSE All-Share by 3.4% per annum. An investment in 1955 of £1,000 in the HGSC Index with dividends reinvested, would today be worth £3.25 million. In contrast, an investor would have just £620,000 if they had invested in the FTSE All-Share over the same period (*source: Elroy Dimson and Paul Marsh - London Business School RBS Hoare Govett Smaller Companies Index Report, January 2011).

The universe of small cap stocks is vast; far outweighing the number of options within the FTSE 100 and 250 indices. Small-cap stocks are also illiquid and generally under researched, which makes direct investment into the sector a challenge. Investment through an experienced Investment Manager provides access to stock-picking skills and market knowledge, which define the stock selection process, with the intention of improving ultimate performance.

Why Downing?

Private Equity Style
Downing seeks out undervalued companies and applies private equity due diligence techniques to help mitigate the higher risk of investing in smaller companies. Downing carries out its own analysis to understand the potential of the companies it invests in, with the aim of generating significant investor returns over the long-term.

Investment Strategy
The Fund will invest in a concentrated portfolio of 25 to 30 companies, all of which will have a market capitalisation of under £150 million at the time of purchase. Some may be unloved companies that have fallen from grace for the time being, some may be turnaround candidates and others may be special situation stocks. Finally, there will also be some lower growth holdings to balance the portfolio. Downing also manages a range of other funds focused on unquoted and AIM quoted stocks, which may provide the opportunity for the Fund to co-invest.

Experienced Managers
Downing has an investment team of eight individuals; within this team there are two specialist AIM and Small-Cap Investment Managers:

Judith MacKenzie
Judith joined Downing in October 2009. Previously she was a partner at Acuity Capital managing AIM-quoted VCT and IHT investments and the CF Acuity RAM Fund (the predecessor to this Fund). Prior to Acuity, Judith spent seven years as a senior investment manager with Aberdeen Asset Management Growth Capital as co-Investment Manager of the five Aberdeen VCTs, focusing on technology and media investments in both the public and private arenas. Judith is a Fellow of the Securities Institute and is a Scottish Executive Appointee to the Scottish Development Industrial Advisory Board.

Tony Dalwood
Previously CEO of SVG Advisers (formerly Schroder Ventures, London) and Chairman and Founder of SVG Investment Managers. Adviser to the London Pension Fund.

About the Fund
At the present time the Fund is invested in 25 holdings. These investments provide a diversified portfolio, ranging from market capitalisations of £10 million to £225 million. This provides a degree of liquidity for investors while also giving the Investment Manager the flexibility to stock-pick slightly more illiquid special situations with the ability to outperform.

Authorised Corporate Director (ACD)
The ACD of the PFS Downing Active Management Fund is Phoenix Fund Services (UK) Ltd, authorised and regulated by the Financial Services Authority. Registered Office: Springfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW.

Investment Size
The minimum investment is £1,000. Investors should take appropriate advice to determine a suitable level of investment in a higher risk product. Investment in the Fund is suitable for ISA and SIPPs.