While the size of the fund means its top-10 holdings are dominated by defensive large caps such as HSBC, BP and Unilever, manager Richard Plackett does have some smaller, high-conviction bets that are giving the portfolio an injection of growth. Here are five of these:
Blinkx
The AIM-listed internet media platform currently makes up 0.27 per cent of the UK Special Situations portfolio. It is trading on a price to earnings (P/E) ratio of 25.5, meaning its valuation has halved since last year.
However, the stock is projected to reach a P/E ratio of 33.3 per cent at the end of March, meaning it is likely to go up in value.
The company, which is split between San Francisco and London, connects online video viewers with content publishers and distributors. It joined London’s small cap AIM index in May 2007.
Since then, Blinkx has picked up 34.52 per cent, while the index has shed 34.34 per cent, according to FE Analytics.
Performance of stock vs index since 2007
Source: FE Analytics
The stock has, however, been extremely volatile compared with the underlying index over the last five years, with an annualised figure of 90.24 per cent.
Only two funds in the IMA universe hold the stock in their top-10 – MFM Techinvest Technology and Manek Growth, of which it makes up 9.1 per cent of total assets.
Dialight
Dialight is a British-based FTSE 250 technology equipment company that specialises in lights for hazardous locations.
It currently makes up 0.84 per cent of the Special Situations fund. It was previously part of the Roxboro Group, but was renamed Dialight in 2005.
Over the last decade it has returned 1171.46 per cent, compared with 370.86 per cent from the FTSE 250 and 884.66 per cent from the FTSE 350 Technology Hardware & Equipment index.
The stock has continued to outperform both indices over one, three and five years, according to FE Analytics.
Dialight is trading on a P/E ratio of 25.7, broadly in line with its valuation over the last three years. It is currently yielding 1.3 per cent – its lowest figure for the past five years, according to The Share Centre.
Four funds in the IMA universe hold Dialight in their top-10, including Slater Growth, Slater Recovery and JPM UK Smaller Companies.
Pure Wafer
This Swansea-based information technology hardware company makes up an extremely small percentage of Plackett’s portfolio, at just 0.05 per cent.
It allows semiconductor manufacturers to reuse wafers – a thin slice of silicon crystal used in integrated circuits and other microdevices.
The company has had a difficult time of late, losing 92.54 per cent over five years and shedding 46.03 per cent over three.
However, it has regained some ground over the last 12 months, picking up 3.03 per cent.
This meant it beat the FTSE AIM index, but is still well behind the FTSE 350 Technology Hardware & Equipment index.
Performance of stock vs indices over 1 yr
Source: FE Analytics
The stock has been significantly more volatile than both indices over the last year.
No funds hold Pure Wafer in their top-10.
Spirent Communications
This is a multinational telecommunications testing company that is based in Crawley but has operations throughout North America and the UK.
It currently makes up 1.99 per cent of Plackett’s portfolio. It is trading on a P/E ratio of 16.9 and is currently yielding 1.4 per cent, according to The Share Centre.
It has made an impressive 1,193.53 per cent over the last 10 years, while the FTSE 250 has gained 370.86 per cent.
It has continued to outperform over five years, but has lagged the index over one and three, according to FE Analytics.
Two funds hold the stock in their top-10.
Xaar
Continuing Plackett’s theme of technology and electronics, Xaar, an independent supplier of industrial inkjet printheads, makes up 0.5 per cent of the fund.
The company was formed in Cambridge in 1990 and listed on the London Stock Exchange in 1997.
Xaar has outperformed the FTSE techMARK All Share index over one, three five and 10 years.
Over the last decade, it has gained 847.37 per cent while the index has picked up 261.63 per cent, according to FE Analytics.
Performance of stock vs index over 10 yrs
Source: FE Analytics
It is trading on a P/E ratio of 21.7, which is expected to decrease slightly over the next year. It is currently yielding 1.1 per cent.
FE Alpha Manager Paul Marriage is a fan of Xaar, with a 2.23 per cent exposure in his five crown-rated Cazenove UK Smaller Companies portfolio.
FE Alpha Manager John McClure also holds the stock in his four crown-rated Unicorn UK Smaller Companies fund.
Five other funds in the IMA universe list the stock in their top-10.