August update – a summer drift for the UK market but the bull market remains intact

In August, The IFSL RC Brown UK Primary Opportunities Fund returned -1.51% compared with -2.76% for the FTSE All Share.

A quieter month for the Fund compared with July, which is to be expected during peak holiday season. Nevertheless we still participated in some interesting opportunities – primary placings in Jadestone Energy, IG Design and Arena Events.

Markets remained relatively stable though a rise in volatility towards month end saw the FTSE suffer and end the month lower. Emerging markets were the main focal point as Turkey bore the brunt of an emerging market sell off – an increasingly strong dollar puts pressure on those countries who have borrowed heavily in dollars. The US market hit new all time highs as their economy continues to grow strongly and with record margin levels. Trade wars remain a concern though it was encouraging to see the US and Mexico agree a bilateral trade agreement. The FTSE suffered from its exposure to miners, which sold off, and a slight bounce in sterling on hopes the UK may agree a special trade deal with the EU.

Much has been written about this now being the longest bull run in history, surpassing the previous record held from November 1990 to March 2000. Since March 2009 we have not seen markets fall more than 20%, the definition of a bear market. We prefer to focus on valuations which, in the UK at least, are not overly expensive and offer relative value compared to US equities and broader fixed income markets.

We anticipate a busy run up to the year end and are aware of a strong autumn pipeline as companies look to raise money for expansion. We are currently looking at a number of potential investment opportunities and expect many more to follow.


Jadestone Energy

Jadestone is an oil and gas company with assets located offshore of Australia, the Philippines and Vietnam. We acquired the shares as part of a $110m fundraise to acquire further offshore assets. We were attracted by the maturity of the assets, their attractive cashflow profile and the discount to NAV of the assets being acquired. We consider it a transformational deal and with the shares now also listed in London, would anticipate a re-rating in the fullness of time.

IG Design

IG is a leading designer, manufacturer and distributor of gift wrapping paper and related products. The shares were acquired as part of a placing to fund the acquisition of a US company which will give them greater reach in that geography. The shares have already appreciated more than 10%.

Arena Events

Arena provides temporary seating and structures at a range of leading events globally. It is particularly strong in the sports events sector, with a blue-chip client list including Wimbledon, Hong Kong Sevens and a plethora of golfing events. We added to our existing holding (acquired at IPO in 2017) as part of a placing to fund the acquisition of two companies that broaden its offering, allowing it to increasingly offer a one-stop shop for clients.


Dairy Crest

The shares struggled to make any real progress following the placing earlier in the year and, whilst they are relatively modestly rated, we concluded there were more attractive opportunities available to us.

Ten Entertainment Group

We trimmed our holding on concerns the record summer temperatures may be affecting visitor numbers at its ten pin bowling sites during the key summer trading period.

On the Beach

We sold our holding following a re-assuring trading update that saw the shares rally sharply. There had been concerns that due to record temperatures, consumers were booking fewer overseas beach holidays. We were content to take substantial profits on a company we had held since its IPO in 2015.

Hargreaves Lansdown

The shares have continued to hit record highs and this is unquestionably an excellent business. With markets close to recent highs during the month, we trimmed our holding, as we did last month.

Blue Prism

The shares continue to defy gravity with huge interest in the artificial intelligence sector. We trimmed our holding with the share price reaching new highs.


Cumulative Performance (Total Return %)– August 2018

Fund/Benchmark Name Year to 31/08/2018 3 Years to 31/08/2018 5 years to 31/08/2018
IFSL RC Brown UK Primary Opportunities P Acc 7.05 50.70 64.89
IA UK All Companies 6.57 31.97 46.94
 FTSE All Share 4.68 33.73 44.09

Discrete Annual Performance (Total Return %)– August 2018

Fund/Benchmark Name 31/08/2017 to 31/08/2018 31/08/2016 to 31/08/2017 31/08/2015 to 31/08/2016 31/08/2014 to 31/08/2015 31/08/2013 to 31/08/2014
IFSL RC Brown UK Primary Opportunities P Acc 7.05 23.51 13.98 -1.27 10.82
IA UK All Companies 6.57 13.77 8.85 1.52 9.67
 FTSE All Share 4.68 14.33 11.73 -2.34 10.33

Source: FE 2018

Top Ten Active Holdings

Source: RCBIM as at 31 August 2018

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. R.C. Brown and Marlborough are authorised and regulated by the FCA. Marlborough Fund Manager are the ACD. The Key Investor Information Document and the Full Prospectus can be obtained via or by request at:

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