It’s been a rollicking few months for the FTSE Fledgling Index. Composed of stocks too small for the FTSE All-Share, it makes up just 2% of the UK’s entire market cap. But it’s up 37% since the start of 2009, against a 1.4% drop for the FTSE 100. And riding those gains in spectacular fashion is the Gartmore Fledgling Trust.
Up 51% since the start of the year, it’s managed by Gervais Williams, a Welshman who’s been investing in the UK small-caps sector since 1985. Looking for firms that have fallen from grace and are due a recovery, 65% of the portfolio is managed on an indexed basis (like a tracker), with up to 35% actively picked.
“It is an astonishing portfolio of unloved companies”, Williams tells The Daily Telegraph, with many of the stocks looking embarrassingly cheap. “Many are trading at 20% to book value, huge discounts with yields of 9%.” Among them is JJB Sports, up 413% after it announced its landlords and creditors had voted for a company voluntary agreement (CVA) that could secure the firm’s future. Other major holdings include Fiberweb, the nappy material maker, which jumped 15% last week on takeover talks. XP Power, a provider of emergency power supply systems, is up 54% since the start of the year.
Cautious about the outlook for the UK economy in the near term, Williams still believes that the positive performance of the Fledgling Index so far this year is a good example of its potential. Considering there is no tracker fund for the index, Williams’ fund, which trades at a 13% discount to its net asset value, is a good way to get exposure.
Contact: 0800-289336.
Gartmore Fledgling Trust top ten holdings
| Name of holding | % of assets |
|---|---|
| Innovation Group | 2.6 |
| Fiberweb | 2.6 |
| Office2Office | 2.5 |
| Skyepharma | 2.4 |
| Alphameric | 2.3 |
| Xaar | 2.2 |
| Microgen | 2.2 |
| Dmatek | 2.1 |
| Carr’s Milling Industries | 2.1 |
| XP Power | 2.0 |