IFSL RC Brown UK Primary Opportunities | Fund Update | December 2024
December: UK equities lower but a positive return for 2024
It proved a soft end to the year as UK equities in December failed to build further on their hard-won gains in 2024. A total return for 2024 of 9.5% for the FTSE All Share is a reasonable return, and rewards investors for the risk compared with gilts. However, the returns in Europe were again completely overshadowed by a second successive return of more than 20% by the US market. A significant majority of these gains came from the mega cap technology focused ‘Magnificent 7’ led by Nvidia. The yawning valuation gap between these and UK & European equities has become ever wider which we believe will reduce over the coming years, either as a result of a positive re-rating of UK and European equities, or a de-rating of US equities, notably the mega cap US companies. Either way, we expect M&A activity in the UK to continue given the modest valuations.
2024 saw an upturn for equity fund raisings on the UK market, with over £16bn raised (compared to £8bn in 2023), albeit equity raisings remain modest compared to the last decade. Much has been written about the lack of fund raisings and IPOs in London in recent years and a number of companies switching their primary listing to the US. Clearly this is of some concern, but London remains one of the largest exchanges in the world and there is renewed belief that 2025 will be a strong year for equity fund raisings and a more buoyant IPO market. The recent reforms to the listing rules alongside a more stable domestic political backdrop, we believe provides grounds for a renaissance in the UK equity market.
Animalcare was added to the portfolio as part of an equity placing whilst Aviva agreed a £3.7bn takeover of smaller rival Direct Line which consolidates its position as the UK’s largest insurer.
In December, the IFSL RC Brown UK Primary Opportunities fund returned -1.0% compared with -1.2% for the FTSE All Share and -1.4% for the IA UK All Companies sector, all on a total return basis.
Purchases
Animalcare
Animalcare is a veterinary products company focused on the companion animals’ segment of the market. We acquired the shares as part of an equity raise to fund the acquisition of an Australian company focused on the equine market. The deal is materially earnings enhancing and opens up a new geography which we believe makes it a compelling investment.
Sales
We trimmed the holdings in HSBC and Natwest on strength, both hitting multi year highs. We also trimmed our holding in Raspberry Pi which rose over 80% in the month following a recent strategic partnership and the disclosure of a new tech focused investor.
Cumulative Performance (Total Return %) – To 31 December 2024
| Fund/Benchmark Name | 3M | 6M | 1Y | 3Y | 5Y | 10Y | Since Inception (28/05/1997) |
| IFSL RC Brown UK Primary Opportunities P Acc | -1.5 | 1.8 | 7.0 | -6.7 | 9.4 | 76.8 | 497.2 |
| Quartile Ranking IA UK All Companies | 3 | 2 | 3 | 4 | 3 | 2 | 2 |
| IA UK All Companies | -1.3 | 1.0 | 7.9 | 5.3 | 16.1 | 67.0 | 352.9 |
| FTSE All Share | -0.4 | 1.9 | 9.5 | 18.5 | 26.5 | 81.9 | 405.4 |
Source: FE: 31/12/2024
Discrete Annual Performance (Total Return%) – To 31 December 2024
| Fund/Benchmark Name | Year to 31/12/2024 | Year to 31/12/2023 | Year to 31/12/2022 | Year to 31/12/2021 | Year to 31/12/2020 |
| IFSL RC Brown UK Primary Opportunities P Acc | 7.0 | 4.9 | -16.9 | 20.5 | -2.7 |
| Quartile Ranking IA UK All Companies | 3 | 4 | 3 | 1 | 1 |
| IA UK All Companies | 7.9 | 7.4 | -9.1 | 17.3 | -6.0 |
| FTSE All Share | 9.5 | 7.9 | 0.3 | 18.3 | -9.8 |
Source: FE: 31/12/2024
Please be advised that the past is not necessarily a guide to future performance. Investments and the income derived from them can fall as well as rise and the investor may not get back the amount originally invested.
