SVM Asset Management saw losses narrow last year despite a second year of upheaval for the equities boutique.

The Edinburgh-based manager made a £1.46m pre-tax loss in 2013, following £1.66m the previous year, according to accounts just posted at Companies House.

Turnover was down modestly from £3.46m to £3.35m, but administrative expenses were cut from £4.23m to £3.85m.

During the year SVM suffered the loss of its £120m SVM Global investment trust to Henderson, following the 2011 hostile takeover of its £60m UK Active trust, which saw the firm plunge into the red in 2012 as turnover crashed by a third.

But the firm made a healthy £1.82m return on its listed investments last year, following a £1.86m reverse the previous year, which saw the balance sheet strengthen and shareholder funds finish the year up from £18m to £18.3m.

Managing director Colin McLean, who co-founded the business with his partner Margaret Lawson in 1990, said: "Money is coming back into equity markets. We are finding enough people want enough active managers, and there are not so many around who have focused just on active management and a limited size of funds."

He added: "We have got an environment quite favourable to equities, and in previous years the latter part of the year has been favourable." He said SVM was not particularly exposed to areas where progress was breaking down, such as smaller companies. "Our funds are fully invested," he said.

Mr McLean said SVM's World Equity fund, managed by Neil Veitch, had now built a strong four-year record and had pushed assets up from £17m a year ago. "That fund is £40m, the next stage would be to grow it more rapidly," Mr McLean said. "UK Growth had a good year and has grown quite nicely past £100m. We have also been working to tidy up some of the additional costs of smaller funds." UK Growth has more than doubled in two years and earlier this year manager Ms Lawson appeared in the top 10 of The Herald's Citywire rankings of Scottish-based fund managers.

SVM's five principal funds also include the £113m UK Opportunities and two European funds (total £35m), alongside a number of separate client accounts.

Mr McLean said he wanted to fill the gap left by SVM Global last year, which also saw the departure of former director Donald Robertson. "We still need assets to replace that, and it takes time to cut some of the costs, we have only just closed down the savings scheme." He went on: "For us it is about winning separate account business, I think clients tend to focus more on larger firms, but there is attrition at the top end towards passive funds and indexation. It is as challenging for big firms to get growth as it is for smaller firms to win new accounts with good performance records."

SVM's assets under management are steady at £450m, down from almost £700m three years ago. Employee numbers were 23, down from 25, staff costs were cut from £2.3m to £2.1m, and director remuneration including pensions from £657,000 to £471,000. The highest-paid director, assumed to be Mr McLean, who with Ms Lawson owns 95% of SVM, took a £1000 pay cut to £195,000.