Fund of the week: why small is beautiful

The long experience of manager Glen Platt combined with the nimbleness of a boutique fund means that Melchior UK Opportunities has achieved a lot in a very short timeframe.

It's only been running a year, but the performance of the Melchior UK Opportunities Fund "speaks for itself", says James Davies, research manager for Bath-based Chartwell Investment Management. Its manager, Glen Pratt, returned 32.4% over the 12 months to the end of April, against 12.67% for the average manager in the sector.

This splendid performance may in part reflect Pratt's long experience: the 13 years of his pre-Melchior career were spent at big-name fund houses, such as Fidelity and Newton. His shift away from these firms to Melchior, a much smaller boutique firm, has also played a part, says Hargreaves Lansdown. Why? Because he is no longer constrained by "liquidity issues": funds at the likes of Fidelity are so big that it can take several days to buy enough shares to build up a position in a new stock. Pratt can now trade more quickly, one of "the key factors behind his surge up the performance table", says Hargreaves Lansdown. This also allows him to employ a "rigorous sell discipline if he believes the upside potential of a stock fails to compensate for the risk".

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