Current market conditions
The recent outbreak of COVID-19 has introduced substantial volatility to global asset classes and smaller companies listed on the Alternative Investment Market have not been immune to this recent trend. Investors continue to focus on day-to-day developments and are uncomfortable with heightened uncertainty. In many cases this sentiment has moved share prices away from the fundamental value of the underlying businesses.
An established, diversified portfolio
The Octopus AIM VCT plc and Octopus AIM VCT 2 plc consist of portfolios of over 70 growth businesses, many leading in their respective industries. The portfolios are well diversified with holdings in technology, industrials, pharmaceuticals, support services and many more growing sectors. Indeed, more than half of the net assets of both funds are invested into profitable companies with some of them having successfully traded through the Financial Crisis during 2008/2009. We believe that the majority of our investee companies have the financial strength to weather the challenging conditions that businesses currently face.
The portfolios have limited direct exposure to the individual consumer, and many investee companies generate dependable recurring revenues a from wide range of global customers and have strong supply chains. Smaller businesses tend to be more flexible and nimble allowing them to capitalise on improving economic conditions.
What are we doing to help
Our funds remain very much open for business and the investment team is continuing to evaluate new businesses to invest in. The investment team continues to function in the same way as ever and is in close contact with many of the management teams to understand what is going on and how we can be supportive. We are reaching out to those who may require support, and stand ready to back businesses during these challenging times.
We never want to see the net asset value decrease, however like the management teams of our businesses, we focus on the underlying value and take a long-term, patient approach.