Rockwood Strategic (RKW)

Rockwood Strategic (RKW) has one of the best Performance track records of all UK equity investment trusts. This is largely a result of manager Richard Staveley’s benchmark-agnostic approach of identifying some of the most undervalued companies listed at the lowest end of the UK market cap spectrum. Performance has been boosted recently by a flurry of M&A activity, pushing near-term returns ahead of his ambitious double-digit annual target return, with longer term returns even better at close to 100% for the five years to 22/09/2026.

Whilst M&A has again been a feature, Richard has been exercising discipline and exiting several positions that have rallied significantly. Proceeds have been used to reinvest into both existing holdings and new opportunities, with cash at a normal level of c. 4% (see Gearing). The manager has identified several attractively valued stocks exposed to UK household spending, which he believes is an area beginning to bottom out, although stocks remain on trough valuations as profits have yet to recover. Whilst these additions have all been a result of bottom-up analysis, the Portfolio now has a notable exposure to the domestic consumer of around 13%. Portfolio turnover remains within normal limits, and the high concentration, high conviction approach is unchanged, with c. 57% in the top ten holdings, and a portfolio of just 25 holdings.

The strong performance has led to a considerable growth in assets, as well as a premium rating. The board has sought to meet shareholder demand through new issuance which has further contributed to asset growth, leading to net assets now topping £200m. We understand there are plans for capacity to be limited in the near future (see Discount).