Political developments in response to the ongoing European sovereign debt crisis continued to shape the direction of equity markets through June, says Hugh Cuthbert, co-fund manager, SVM All Europe SRI Fund…

Whereas the focus in May was on the forthcoming Greek elections and what it may mean for the ‘Euro’ project, the epicentre of the crisis has now migrated towards Spain and Italy.



While ‘macro’ concerns continue to drive markets, stock selection was the main driver of the fund’s performance. Most notably our continued faith in the fund’s largest holding, Nautical Petroleum, was rewarded by a cash bid at premium of over 50% to the undisturbed price. We are particularly pleased for the CEO, Steve Jenkins, and his team, who have created significant value with minimal recourse to equity finance (not as common as investors would wish in the oil & gas sector). Post the Nautical bid it was revealed that another of our holdings, Invensys, had rejected an approach from an American suitor. While equity markets may not always recognise the ‘intrinsic value’ of particular businesses, industry will often step-in and close the gap. Micro Focus was another notable performer as the company announced it would make a significant cash return to shareholders.



The fund exited positions in Bellway, Taylor Wimpey, Daimler and AG Barr.