None of the information provided is investment or tax advice.
You should always read the associated risks before deciding whether to invest. These can be found on the product pages as well as in our risks overview.
Please confirm you have read the information above.


Welcome to Downing LLP


Request information for

Product Offer Hero Title

Hello, thanks for your interest in investing with Downing. Please complete this form to receive the requested information.

Did you know. Risk warning. Take 2 mins to learn more.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
plus icon
document search icon 3
min read

Investment Week Summit: VT Downing Small & Mid-Cap Fund

No items found.
Josh McCathie
Josh McCathie

Fund Manager

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.


  • asd
  • asd
  1. asdasd
  2. asd
  1. asd


Downing's Josh McCathie, manager of the VT Downing Small & Mid Income Fund, presented at the Investment Week Summit in July. You can catch-up on the key highlights below.

The investment strategy

The VT Downing Small & Mid-Cap Income Fund is a UK equity income fund investing solely outside of the FTSE 100. The fund aims to provide investors with the potential to compound both an attractive dividend yield and capital growth over the medium to long term. Around 80% of dividends come from the FTSE 100, so most UK equity income funds focus on these large-cap names. However, over 400 companies sit outside of the FTSE 100 which offer attractive yields. Our focus on small & mid-caps offers investors a differentiated approach and diversification from most other income funds.

The fund is a focused 30-50 stock portfolio which seeks to blend a healthy dividend yield with attractive earnings growth, which in turn drives dividend growth. This should result in a compelling total return proposition. The investment process leans heavily on proprietary research to help identify the best investment opportunities within the universe. We look for stocks that both offer the desired characteristics and are trading at a discount to our assessment of intrinsic value. The fund takes a ‘quality value’ approach, seeking companies with a source of competitive advantage or an overlooked business model that can either continually compound above-average returns on capital over time, or we believe has a catalyst that will result in that overlooked quality becoming realised by the wider market.

Taking shape - how the portfolio is positioned

Fund positioning is currently in three buckets, with the first being similar to normal positioning in terms of holding companies that we believe have the ability to compound both dividend and earnings growth over time through efficient capital allocation. This is due to their exposure to enduring growth themes that look through wider macroeconomic noise. Currently, this might include companies that are tapping into various points of the energy transition value chain, or changing dietary needs and an increased interest in healthy living.

The second bucket contains companies that are offering compelling value on a 2-3 year view and to which the market has already priced in any short-term slow-down. These positions can be picked up on very cheap valuations compared to more normalised earnings.

The final bucket contains companies that we believe are beneficiaries of the current economic environment and whose qualities are being overlooked or are not currently appreciated by the market as expressed by their current valuation.

Investment opportunities on the horizon

A theme being played in the portfolio just now is how the inflationary environment is affecting the insurance market - there are clear winners and losers in this space. Firstly, several years of high catastrophe losses for reinsurers and heightened inflation have had an adverse effect on provisioning for claims. This has resulted in significant capital to write new business being withdrawn and led to over two years of double-digit reinsurance premium inflation which is set to continue for some time. Conduit Holdings, a newer entity, has none of the back book inflation issues and has had the capital to take advantage of the hardening premium environment. This is evidenced in its most recent Q1 2023 results, which reported 19% growth in rates net of their own claims inflation. Despite being in a sweet spot in its industry, Conduit trades at close to a 50% discount to larger reinsurers. This presents a compelling opportunity where we expect to see double-digit earnings growth driven by current market dynamics, and a potential rerating to closer to peer multiples, all whilst paying a 6% dividend yield.

Learn more about the VT Downing Small & Mid-Cap Income Fund

Risk warning: Opinions expressed represent the views of the fund manager at the time of publication, are subject to change, and should not be interpreted as investment advice. Please refer to the latest full Prospectus and KIID before investing; your attention is drawn to the risk, fees and taxation factors contained therein.

Please note that past performance is not a reliable indicator of future results. Capital is at risk. Investments and the income derived from them can fall as well as rise and investors may not get back the full amount invested. Investments in this fund should be held for the long term and are higher risk compared to investments solely in larger, more established companies. 

Important notice: This content is intended for retail investors and their advisers and has been approved and issued as a financial promotion under the Financial Services and Markets Act 2000 by Downing LLP (“Downing”). This document is for information only and does not form part of a direct offer or invitation to purchase, subscribe for or dispose of securities and no reliance should be placed on it. This document contains information and analysis that is believed to be accurate at the time of publication but is subject to change without notice. Whilst care has been taken in compiling the content of this document, no representation or warranty, express or implied, is made by Downing LLP as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified.  Downing does not offer investment or tax advice or make recommendations regarding investments.


We're here to help

If you are a financial adviser, or discretionary fund manager call 020 7630 3319 or email us at

If you are a private investor call  020 7416 7780 or email