The environment for equity investing has become a little more challenging in recent months in the wake of developments such as Brexit and the Trump presidency. Rising longer term interest rates (bond yields) and the risk of higher inflation in developed economies (fiscal policy returning to the fore?) has seen a selloff in both yield-based defensive assets and long duration growth assets. The UBS Small companies investment process is one that preferences quality characteristics of businesses ahead of a simplistic and often myopic 'low PE' valuations. Our fund has a 12 year track record of good performance achieved by focusing on businesses with many of these 'quality' business franchise characteristics. Growth, margin and the capital required to deliver cash earnings are the key quantitative factors of our investment process. Furthermore, a six year cash flow forecast forces us to look beyond the typical short term investment horizon of equity markets that overemphasise 1-year-forward PE valuations.