Robert Siddles believes in a long-term approach to investing. So it helps that he has been in charge of F&C US Smaller Companies for almost a decade. In that time he has outperformed the Russell 2000 Index every year but one.
Siddles focuses on manufacturing and infrastructure, reasoning that even in a period of low growth “machines wear out and have to be replaced… and capital needs to be spent on US infrastructure”. From a “universe of 3,000 eligible companies” he chooses those with strong business fundamentals that are out of favour with investors. Siddles likes firms with a diverse customer base and a strong position in their markets. For example, top holding Quanta Services builds infrastructure for telecoms, conventional energy and renewables.
Unusually for the manager of a US-focused fund, Siddles is based in Britain and only travels to America once or twice a quarter. He believes that this physical distance helps him maintain his objective, risk-averse approach to stock picking.
Whatever the reasoning, his approach has paid off, with the fund up 40% over the last year. It has also managed 19% and 31% increases over three and five years respectively.
Siddles’ aversion to risk meant his fund took less of a hit during the height of the crisis than the wider small-cap sector. It also recovered more quickly. Right now, “fears about global growth have reached fairly extreme levels” and he thinks smaller companies have the most to gain if confidence returns. That makes this fund a good bet for long-term investors prepared to sit out a few lean years if a double-dip strikes.
Contact: 0800-136420.
F&C US Smaller Companies top ten holdings
| Name of holding | % of assets |
|---|---|
| Quanta Services | 2.3 |
| ICF International | 2.2 |
| The Andersons | 2.2 |
| CapitalSource | 2.1 |
| Genesee & Wyoming ‘A’ | 2.1 |
| Kirby | 2.1 |
| HCC Insurance Holdings | 2.1 |
| Amedisys | 2.0 |
| Brown & Brown | 2.0 |
| Alleghany | 2.0 |