The index has fluctuated between 5,200 and 5,970 in the year-to-date, but the fund manager expects to see it breach the psychological 6,000 mark before long.
"Things in the UK are a little bit better and there is now scope to relax," said Veitch (pictured), who heads up the four-crown rated SVM UK Opportunities fund.
"The chancellor has done the hard work and been harshly treated, but the worst thing we could have done was go out and be cavalier about UK finances." "The credibility has been won, but we shouldn’t get carried away. It’s still going to be a low-growth environment, but we are going in the right direction."
"I still think the outlook for small to mid cap stocks is better than the FTSE though."
Veitch adds that investors should be taking a long-term view of equity markets, and that there is "no reason the equity market couldn’t double over a 10-year view".
However, the manager has moved to dampen volatility in his portfolio.
"The performance has been strong but it has been volatile, and that’s not to everyone’s taste, so we sought to reduce the volatility," he said.
Veitch adds the fund had a particularly difficult period in 2008, which has prompted him to protect the portfolio from similar shocks in a worst-case scenario.
"No adviser likes to go and explain to their client why a fund is down 50 per cent," he continued.
Performance of fund vs sector and index over 5-yrs
Source: FE Analytics
Over five years, the £82.9m SVM UK Opps portfolio has delivered second-quartile returns of 13.96 per cent, outperforming the IMA UK All Companies sector, which made 11.86 per cent.
However, it underperformed the FTSE All Share, which returned 16.45 per cent over the same period.
The fund has come charging back over one year, outperforming both the sector and index, with returns of 18.66 per cent.
Veitch says that SVM's experience of running hedge funds has allowed it to use shorting skills in the UK Opps portfolio, which has helped to reduce its volatility.
He adds that he has increased his large cap exposure to roughly 50 per cent of the fund, while the rest of the holdings remain in the small to mid cap space.
Over 10 years, the fund has the third-highest level of annualised volatility in the sector, at 20.35 per cent.
However, over one year its has significantly stabilised, and its annualised volatility now stands at 14.53 per cent – a second-quartile figure.
The manager continues to be wary of bonds, which he feels are overvalued considering their low potential for returns.
"I’ve been wrong on bonds for a long time, but just because I’ve been wrong for a long time doesn’t mean I’m wrong now. They’re return-free risk," he said.
Veitch also manages a global equity mandate at SVM, which has a concentrated portfolio of 40 stocks and aims to take advantage of the team’s best ideas.
"The top 10 are 40 per cent of the portfolio," he explained. "We believe there’s no point in diluting our best ideas."
The three crown-rated £11.5m SVM World Equity portfolio has been top quartile since the firm converted its UK Alpha fund into a more global mandate in December 2010.
Over the period, the fund has returned 7.42 per cent, outperforming both the IMA Global sector and the MSCI AC World IMI index, which have returned 1.84 and 5.11 per cent respectively.
Performance of fund vs sector and benchmark since launch
Source: FE Analytics
SVM UK Opps has a minimum investment of £1,000 and an annual management charge (AMC) of 1.5 per cent. It has a total expense ratio (TER) of 1.84 per cent.
The World Equity fund has a minimum investment of £1,000 and an AMC of 1.5 per cent. Its TER is 1.98 per cent.