The vagaries of the British economy may deter investors from backing British firms – especially small caps, which tend to be riskier than larger stocks. However, they may be missing a trick.
Among the best-performing investments in 2012 were funds investing in small and medium-sized companies, says Mark Dampier in The Independent. One “exceptional performer” was the Cazenove UK Smaller Companies Fund.
Run by Paul Marriage, it is up 32% since the beginning of 2012 and, according to Trustnet, delivered a return of 82.2% over three years and 79% over five. Only three smaller-company fund managers – from Fidelity, Liontrust and River and Mercantile – have beaten his 2012 performance, notes The Mail on Sunday.
Marriage, one of Citywire’s top 20 worldwide fund managers, spends his time researching companies and getting to know their management. On average, he meets 400 companies a year. “I am constantly looking for new ideas,” he tells the Mail on Sunday. “I don’t want to miss any investment opportunities – it’s like devouring new books in a library.”
He maintains a core portfolio of 50 stocks, avoids oil and gas companies and refuses to invest without first meeting a firm’s management. Just under 37% of the fund’s holdings are in industrials, such as British Polythene Industries; 17% are consumer services stocks and 15% technology shares.
Half of the profits generated by the fund’s holdings are from overseas. Overall, says Dampier, Marriage believes there is “plenty of value” left in small caps. He also thinks increased merger and acquisition activity will give his portfolio a boost in 2013.
Contact: 0800-015 9592.
Cazenove UK Smaller Companies top ten holdings
| Name of holding | % of assets |
|---|---|
| Perform Group | 3.25% |
| Vitec Group | 3.09% |
| Low & Bonar | 2.79% |
| John Menzies | 2.51% |
| Smart Metering Systems | 2.44% |
| Telford Homes | 2.40% |
| Restore | 2.31% |
| Renishaw | 2.27% |
| British Polythene Industries | 2.25% |
| Booker Group | 2.19% |