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Fund of the week: The Neil Woodford of small caps
This small-cap fund has returned over 80% over the past five years, compared to a 14.1% sector average, by investing in firms with resilient business models and predictable earnings.
There are a small number of elite fund managers who are so good that people buy their funds for exposure to them rather than to their portfolio, says Richard Troue of Hargreaves Lansdown. Harry Nimmo is one of those fund managers. "He is the Neil Woodford of the smaller company world," says Mark Dampier in the Independent.
Over the past five years, Nimmo's Standard Life Investments UK Smaller Companies Trust has returned 80.8% compared to a 14.1% sector average. Earlier this year the fund won the UK Smaller Companies category at the Moneywise Investment Trust Awards for the fourth year in a row.
Like Woodford, Nimmo tends to avoid companies that are highly sensitive to economic conditions, instead going for firms with resilient business models and predictable earnings, says Dampier.
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Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
One example of this is Asos, the online fashion retailer, which makes up 4.6% of the fund's portfolio. The share price has risen by 153% over the past year and consistently beats expectations as its international business grows. This helped the fund grow by 38.5% in the 12 months to 30 June, against a 24.4% rise in the Hoare Govett Smaller Companies Index.
Nimmo has recently added Hikma Pharmaceuticals, the Jordanian generic pharmaceuticals company, to his portfolio as spending on healthcare is "rising rapidly" in the Middle East, where Hikma is the market-leading company. The trust is trading at a 4.04% discount to NAV at present and the total expense ratio is 1.2%.
Join more than 165,000 subscribers and keep yourself informed with the latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
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