Small-cap stocks have recently suffered from indiscriminate selling, according to Neil Veitch, manager of the SVM UK Opportunities Fund, meaning investors could miss out on fundamentally sound shares.

Veitch has found interesting opportunities in recent weeks among stocks that have declined considerably in value (some by up to 40%) due to volatility in global financial markets, but retain strong underlying basic elements.

There are also a number of stocks that were previously sold by investors on valuation grounds that have since become attractive again. Such stocks, including Elementis, Novae and Morgan Sindall, currently offer opportunity for disciplined investors, according to Veitch. All three have recently been added to the SVM UK opportunities portfolio.

Veitch said: “We are confident that these holdings will ultimately generate significant returns. However, until visibility improves, volatility is likely to remain high. As ever, success will depend on rigorous fundamental analysis that will allow us to identify those stocks best placed to outperform.”