IFSL R.C.Brown UK Primary Opportunities Fund | Fund Update | November 2021

7th December 2021

November: Omicron sell off and our take on ESG

Just as the UK market was threatening to break higher, news that a new, potentially more transmissible Covid variant, Omicron, had been detected, global markets went into reverse on fears tougher restrictions would need to be implemented and the damage this might wreak on recovering, albeit still fragile, economies. Whilst Q3 earnings were broadly strong and UK interest rates were, to some experts’ surprise, left at 0.1%, (given UK inflation hitting a ten year high) it was the new Covid variant news that dominated sentiment late in the month.

We are increasingly being asked by investors about ESG (environmental, social & governance) issues. We have always liked to invest in good quality companies that we consider to have a market leadership or a particular niche in their sector. We have always believed part of being a good company, is to treat all stakeholders fairly, and on the occasions mistakes are made, to be open and transparent about short comings. The environment, sustainability and a transition to a carbon neutral economy has been on the agenda of companies we speak with for a considerable time. Events such as COP 26, further the focus and it is we believe for companies to lead the way to a sustainable future.

It is our view that companies are on a journey, and a transition, particularly for energy intense sectors such as mining and oil & gas, will take some time. We do not believe the correct pathway as responsible investors is to merely sell our shares in such companies. Instead, along with other shareholders, it is to encourage management to set out and communicate a shift to a more sustainable way of doing business. Take oil majors BP & Shell as examples. Both are investing significantly in renewable energy. In time this will become a major part of their business, but in the meantime, the world cannot yet support itself on renewable energy alone. It is better these oil and gas assets are wound down over time by responsible companies who have public shareholders to hold them to account, rather than forcing them to sell the assets to private companies, who may not hold the same standards as those of publicly listed companies.

Our primary opportunities approach is well suited to this evolving world as we are typically investing in companies at the stage they are raising money. This can be for a multitude of reasons but most commonly, we invest in companies that are raising money for expansion and to invest in their business by improving their services and products and making them more efficient. Recent investments with strong ESG credentials that we have invested in are energy and water consultancy company, Eneraqua Technologies and clean energy and battery storage companies ITM Power, Gelion Technologies and Invinity Energy. Another of our most exciting investments is Agronomics, a company targeting investments in cultivated meats – that is meat like products that are grown in laboratories using a fraction of the energy used in traditional farming methods. We anticipate substantial amounts of money being raised in future periods, as new practices and products are developed and adopted on the pathway to a more sustainable future. We shall be part of that process providing capital to many of these UK listed companies.

During the month, we participated in the equity raises in Londonmetric Property and Invinity Energy. A busy month for IPO’s saw Stelrad, Eneraqua Technologies, Devolver Digital and Gelion Technologies all added to the portfolio.

In November the IFSL R.C.Brown UK Primary Opportunities fund returned -2.73% compared with -2.27% for the FTSE All Share and -2.82% for the IA UK All Companies sector.


Londonmetric Property

Londonmetric owns and operates a substantial portfolio of logistics property assets. We view this as one of the most attractive parts of the property sector due to the growing demand for e-commerce fulfilment. We acquired the shares as part of a £175m placing to fund further sites. A high quality FTSE 250 constituent that adds useful income to the Fund.

Invinity Energy

Invinity is a battery technology company producing vanadium flow batteries. The advantages of vanadium over the more commonly used lithium ion batteries include the plentiful low cost supply of vanadium and low fire risk. Given the size of the potential market and the impressive progress to date by the management, we participated in the placing to further grow the production capacity of the Company.


Stelrad is the UK’s leading manufacturer of radiators with a 50% market share. It also has a 20% market share in Europe. With people looking to make their homes more liveable post pandemic lockdowns and the forthcoming roll out of heat source pumps (which require larger, more premium radiators), we consider Stelrad to be well positioned to benefit from these trends. The shares were acquired at IPO.

Devolver Digital

Devolver is a highly regarded computer games publisher. It has a successful history of making popular games for the ‘indie’ market. With over fifteen games due for release in 2022 and a modest payback period on video games production of only four months, we participated in the IPO which will allow funds for further expansion.

Gelion Technologies

Gelion is a battery technology company. Its batteries will use zinc and bromine, rather than the more commonly used lithium ion batteries. The benefits of a zinc bromide battery over lithium ion include the plentiful supply of the materials whereas lithium is notoriously difficult to mine and recycle. An earlier stage investment than Invinity Energy, the impressive track record of the founder and management team and potential size of the market, warranted an investment at IPO.


We maintained cash levels at over 5% which proved prescient given the market sell off towards month end. Brickability was trimmed on strength along with two of our largest holdings Kape Technologies and Elixirr. We exited Jet2 and Aviva at the time of buoyant markets. Music Magpie was also sold following an uninspiring performance since IPO. McColl’s was sold following a profit warning.

Cumulative Performance (Total Return %) – November 2021

Fund/Benchmark Name 3M to 30/11/21 6M to 30/11/21 Year to 30/11/21 3 Years to 30/11/21 5 years to 30/11/21 Since Inception (28/05/1997)
IFSL RC Brown UK Primary Opportunities P Acc -1.8 0.4 22.7 28.5 55.5 508.1

Quartile Ranking

IA UK All Companies

2 2 1 2 1 1
IA UK All Companies -4.0 0.2 17.3 23.0 35.6 311.6
FTSE All Share -1.4 1.9 17.4 16.9 30.6 307.8

Source: FE: 30/11/21 Cont.
Discrete Annual Performance (Total Return %) – November 2021

Fund/Benchmark Name Year to 30/11/21 Year to 30/11/2020 Year to 30/11/2019 Year to 30/11/2018 Year to 30/11/2017
IFSL RC Brown UK Primary Opportunities P Acc 22.7 -4.3 9.4 -0.4 21.5

Quartile Ranking

IA UK All Companies

1 2 4 1 1
IA UK All Companies 17.3 -6.6 12.3 -4.2 15.2
FTSE All Share 17.4 -10.3 11.0 -1.5 13.4

Source: FE: 30/11/21

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.