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Acorn Fund Management.

Aim

This portfolio is aimed at producing capital growth from equities listed on the UK markets.

Strategy

The strategy for the fund is based on Focus Investment which requires:-

	The portfolio will be concentrated on only a few holdings, no more than five.
	The "churn rate" of the fund will be kept to a minimum, companies are to be held for years rather than months.
	Once purchased, each company and the market in which it is trading is studied to ensure that the management is continuing to pursue the correct strategy.
	In the event of one or more holdings growing proportionately larger than others, no action will be taken to reduce exposure to successful investments.
	When opportunities arise to increase a holding at a reasonable price and the funds exist, the portfolio will make further purchases.

Capital Gains Tax

Capital Gains Tax has to be paid when an investment has been successful and there is no getting away from it with the exception of a VCT which would tie the capital up.

Instead of taking the point of view that it is a burden to be suffered, I take the view that CGT is a "interest free loan" from Her Majesties Government which only has to be repaid when I choose to sell a successful investment. The tax to be paid has to be used to the investors advantage.

Reasons for Selling

Unless a business carries on producing excellent year after year there will become a point when a holding has to be sold. Acorn will only sell a company if:-

	The reason for holding no longer exists and the company no longer rates as a Buy.
	The share price has risen so far above the "intrinsic" value of the business that it can only fall when reality reappears.
	The management has created a situation that I can't support or has failed to react to circumstances that threaten the growth of the business.