Fund of the week: Skilled stockpicker brings in predictable profits

"Small-cap management is not about benchmarking; it's about skilled stockpicking," says Patrick Connolly of independent financial planners John Scott & Partners, and Framlington UK Smaller Companies' Roger Whiteoak is one of only about half a dozen managers who have done that "consistently well over a long period of time", he tells What Investment.

Named as Investment Week's UK smaller companies fund manager of the year in 2005, Whiteoak has been unworried about many investors shifting to mid-cap stocks. "If we could make some money in the FTSE 250 I'd move, but we're seeing some good small firms with great potential," he tells Investment Adviser. The strategy seems to be paying off. Over the past three years, the fund has returned over 130% against 60.3% for the FTSE Small Cap index. And unlike other growth managers, he has resisted the temptation to concentrate his portfolio, says Fund Strategy. Instead, he has 80% of the fund in 80 stocks, which he calls "profitable and predictable". The rest is in 70 other stocks that are small, but "when they work, they work very well", he says.

Hargreaves Landsdown approves, and says that this strategy of diversification helps spread risk, "which is important when investing in this higher-risk area".

MoneyWeek

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Name of holding % of assets

Umeco 2.7%

Headlam Group 2.6%

Findel 2.2%

Fenner 2.0%

Enterprise 1.8%

Axis-Shield 1.7%

Rathbone Brothers 1.6%

Gyrus Group 1.5%

Aveva Group 1.5%

Cambrian Mining 1.4%

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