Peel Hunt's picks for growth: Pile into UK and a bit of Bankers

Peel Hunt has rejigged its growth funds' playbook after a difficult 2023, selecting
14 trusts likely to see their share prices recover as the economic backdrop improves.

UK investors looking for attractive total returns and capital growth this year would do well to focus on their home market, according to Peel Hunt’s research team, who have selected Fidelity Special Values (FSV ) and Aberforth Smaller Companies (ASL ) as two of their top picks for 2024. 

The team, which is headed by Anthony Leatham, also included global equity company Bankers (BNKR ), a number of overseas equity trusts and a handful of property and private equity companies for its first playbook of the new year. 


The team at Peel Hunt said they were ‘convinced of the recovery potential’ for UK equities, which are trading on a near record discount to overseas peers. 

The FTSE 100 is on a 36% discount to the MSCI All Country ex UK index when considering price to earning multiples for the year ahead and the discrepancy was ‘more dramatic’ for small and mid cap companies. 

This dislocation means managers have the opportunity to identify mispricings and Peel Hunt have selected Fidelity Special Values and Aberforth Smaller Companies as the best equipped to do the job.

FSV portfolio manager Alex Wright has delivered underlying returns of 223% since his appointment in 2012, double the FTSE All-Share’s 112%, with a focus on the small and medium-sized end of the market the main drivers. 

The £1bn portfolio, which was on the list last year, has about a quarter of assets in financials and a 22% weighting to industrials, significantly higher than the benchmark’s.

Peel Hunt believes the portfolio’s price to earnings ratio of 8.5 times, 25% below the index, provides a good opportunity to access discounts in the UK. The shares trade 8% below par, which is narrower than the peer group average of 10%.

Similiarly ASL’s price to earnings of 6.9 times is a near record low, reflecting its focus on the smaller company end of the UK, where the discount to global markets is particularly stark. Peel Hunt emphasised the portfolio has strong balance sheets, with under 20% holding net debt twice as high as pre-tax profits.

The £1.3bn trust benefitted from increased M&A in 2023, driving shareholder returns of 6%, ahead of its benchmark’s 4%. While the shares trade at an 11% discount, Peel Hunt does not expect it to persist as international and domestic buyers realise the returns on offer at the small-cap end of the UK market.

Last year’s pick Mercantile (MRC ), which is managed by JPMorgan, was given the boot.

Global Equity

Peel Hunt added ‘dividend hero’ Bankers (BNKR ) to its list citing the company’s flexible, multi-manager style under Janus Henderson’s Alex Crooke.

‘In a changing and volatile enviornment, this flexible approach combined with a best-of-Janus Henderson manager skill provides a solid core global equity allocation,’ the team wrote. 

With a portfolio split across six regional managers, Crooke has positioned the portfolio to capture geopolitics and deglobalisation, with large exposures to semiconductors, the green revolution and Japan. 

North America makes up 40% of the £1.5bn trust’s assets, with 17% in Europe, 16% in the UK, 13% in Japan and 9% in emerging markets.

Bankers, which is a corporate client of Peel Hunt, currently trades on a decade-low discount of 12%.

The fund replaces multi-asset trusts, Caledonia Investments (CLDN ) and RIT Capital Partners (RCP ). 

Overseas Equities

The research team also highlighted Japan, India and emerging markets as potential sources of strong returns, with corporate client Ashoka India Equity (AIE ) retaining its place, while Nippon Active Value Fund (NAVF ) and Mobius (MMIT ) have kicked out the poorly performing Fidelity China Special Situations (FCSS ).


Launched in 2020, NAVF engages with Japanese companies to unlock value, which can drive outsized returns.

The Tokyo stock exchange’s recent action to penalise companies trading below book value has rocketed returns, with the trust delivering 74% since launch versus 25% for the Topix index. 

NAVF combined with Abrdn Japan Investment Trust (AJIT ) and Atlantis Japan Growth Fund (AJG ) last year, swelling its assets to £318m. 


Indian equities are well positioned to benefit from continued inflows from retail and foreign investors, as well as strong growth in corporate earnings, Peel Hunt said.

The team said a good fund to capture the trend is Ashoka India Equity, which has a strong track record, driven by their small and mid-cap stock selection. 

Since launch five years ago, WhiteOak manager Prashant Khemka has grown assets from £46m to £300m, with underlying portfolio returns of 24% last year almost double the index’s 13%.

The fund mitigates the volatility of Indian markets by offering an annual redemption facility that allows investors to redeem at around net asset value. There is no management fee, but a fee based on outperformance over three-year periods.

Emerging Markets

The growth-focused fund has a concentrated portfolio, with 61%, or about 18% technology holdings, with the remainder in healthcare, industrials and consumer companies.

The companies held by the fund, which is being led by Carlos Hardenberg with founder Mark Mobius stepping back in November, all have net cash on the balance sheet, with earnings and profit margins ahead of the index.

The £167m trust, which is a corporate client of Peel Hunt, has a only 4% of assets in China, well below its peers and the index, with a major focus on Taiwan, India and South Korea, while software and semiconductors constitute half of assets.

Since launch five years ago, underlying returns of 50% dwarf the MSCI EM index benchmark’s 13% and the shares have widened to a 9% discount.


Peel Hunt kept pan-European listed real estate fund TR Property (TRY ) on the list, citing its strong performance under Marcus Phayre-Mudge since 2011.

The £1bn fund is made up of continental Europe shares (63%), UK shares (31%) and UK direct property (6%). The team have the ability to invest up to 15% in physical property but they have kept this weighting low due to the value on offer across listed opportunities. 

The 4.7%-yielder’s total annual dividend of 15.5p in 2023 was covered 1.11 times by earnings per share of 17.22p, while its size means investors benefit from the scale, with ongoing charges of 0.69%.

Thematic Equities

Financial technology fund Augmentum Fintech (AUGM ) also stays on the list of recommendations, with a strong track record since launch in 2018 under manager Tim Levene.

Since inception, the £273m fund has had five realisations above or at carrying value, with strong underlying returns in 2023 driven by NatWest’s acquisition of Cushon.

While the sector trades at a double-digit discount, with AUGM at a 30% deficit, the prospect of a pick-up in transaction activity in the sector could be a catalyst for narrowing, Peel Hunt said.

Life sciences fund Syncona (SYNC ) returned to the list, with 15 milestones across the 13-strong portfolio over the year and the 31% discount offers compelling value to investors, the team said. The £1.2bn fund has a strong balance sheet with £580m in firepower as of the end of September.

Private equity

Peel Hunt’s corporate client HarbourVest Global Private Equity (HVPE ) offers investors a diversified portfolio of over 1,000 underlying private companies through HarbourVest managed funds, which have delivered strong 10-year underlying returns.  

The £3.1bn portfolio is well diversified by region and by company life-cycle stage and holds $675m in cash.

The board has bought back 2.2m shares over the last 18 months for £48m, but still trades 39% below par and is in discussions with shareholders about a potential dividend policy to be funded by realisations.

The improving economic backdrop and increased transaction activity are all catalysts for a rerating, Peel Hunt said.

Oakley Capital Investments (OCI ), which retains its place on the list, offers access to Oakley’s investment platform and a portfolio centred around predominantly pan-European tech-enabled businesses that often benefit from recurring revenues.

Performance has been robust, with OCI achieving underlying returns ahead of listed equities and  peers, with the portfolio recording average pre-tax profit growth 21% over the year to July. The shares sit at a 28% discount, having come in from a low of 45% in late 2022.

Core-Plus Infrastructure

Pantheon Infrastructure (PINT ) offers a high growth profile with a portfolio of digital infrastructure, namely data centres, towers and fibre assets, which make up almost half of assets.

The global investments are typically private equity investments into operational business, which benefit from infrastructure characteristics, such as long-term, inflation-linked cash flows. The £400m portfolio trades at a 19% discount to NAV.

Corporate client Digital 9 Infrastructure (DGI9 ) sharply derated over the last 16 months to a 71% discount to the June NAV, but is in the process of selling its major asset Verne Global, with the proceeds going towards paying down debt facility.

Peel Hunt believes the share price is too pessimistic, implying no earn-out from the sale of Verne Global and a 50% discount to the remaining three assets in the portfolio.

Battery storage

Gresham House Energy Storage (GRID ) featured in Peel Hunt’s 2023 income playbook, but after a challenging year, which saw reduced revenues and forecasts weigh on dividend cover and valuations, leading to a big drop the shares to a 34% discount, there is much growth on offer.

The 7.5%-yielder’s manager Ben Guest is targeting a doubling in operational capacity to 1200 megawatts this year, while the UK’s balancing mechanism reforms started last month should offer greater provision for batteries, which will increase revenue streams for the UK-focused fund.

This would return the £838m fund to dividend cover, while possible asset disposals and buybacks should also help to rerate the shares. 

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