Fund of the week: 200 high-quality micro-caps
This fund of smaller companies has outperformed the market over the long term.
Investing in smaller firms is risky. So good-quality, "active management can add a lot of value", says Adrian Lowcock, senior investment adviser at Bestinvest, in the FT. Lowcock recommends Giles Hargreave of the Marlborough UK Micro Cap Growth Fund for his "great track record investing over the longer term".
Over five years to 18 May, the fund has posted a return of 36.9% compared with the FTSE Small Cap ex-IT benchmark return of -30.1%, according to Citywire, making it the top-performing UK smaller firm fund over this period. It's also in the top four over one and three years. It has a total expense ratio (TER) of 1.52%, but unlike some other small-cap funds, Hargreave's performance so far justifies it.
Hargreave targets micro-caps: firms with a market capitalisation of up to £100m. He typically holds stakes in more than 200 companies. More than 80% are British firms and he tends to limit holdings to around 2% of the portfolio to mitigate risk.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Technology makes up almost a third of the portfolio, with key holdings including CML Microsystems, Advanced Computer Software Group and Lo-Q. While the current economic climate is a challenge, Hargreave tells Citywire that managers "just have to get through this period". His fund has a decent cash pile to "pick up stock from others who have got themselves into a mess".
Overall, as he tells Investment Week, "I feel relatively bullish, given a lot of what is happening in the eurozone has already been priced in by the markets, arguably to the extent that equities are now underpriced".
Contact 0808-145 2500.
Marlborough UK Micro Captop ten holdings
Clean Air Power | 1.8% |
CML Microsystems | 1.7% |
API Group | 1.5% |
Cap-XX | 1.4% |
Advanced Computer Software | 1.4% |
IDOX | 1.3% |
GB Group | 1.3% |
M&C Saatchi | 1.2% |
Gemfields | 1.2% |
Lo-Q | 1.1% |
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
-
Ofgem proposes new energy tariffs with low or no standing changes
Standing charges have invited public backlash as households battle high energy bills
By Katie Williams Published
-
Google shares bounce on Gemini 2.0 launch
Google has launched the latest version of its Gemini AI platform, and markets have responded positively. Is it time to buy Google shares?
By Dan McEvoy Published