Some of the highest-profile offerings, such as Harry Nimmo’s Standard Life UK Smaller Companies fund, have had to soft-close as a result. However, there are a handful of much lower-profile funds that more than hold their own against the likes of Nimmo and fellow FE Alpha Manager Giles Hargreave.
Here is a selection:
TB Amati UK Smaller Companies
This hidden gem is a top-quartile performer in its IMA UK Smaller Companies sector over three, five and 10 years – a feat only matched by four other funds.
The fund has returned 254.92 per cent over the last decade, compared with 173.04 per cent from its sector average and 217.25 per cent from its Numis Smaller Companies (ex IT) benchmark.
Performance of fund vs sector and index
| Name | 1-yr returns (%) | 3-yr returns (%) | 5-yr returns (%) | 10-yr returns (%) |
| TB Amati UK Smaller Companies | 1.41 | 75.6 | 26.58 | 254.92 |
| NUMIS NSCI Ex Investment Companies | 14.37 | 45.59 | 20.03 | 217.25 |
| IMA UK Smaller Companies | 8.6 | 47.84 | 8.22 | 173.04 |
Source: FE Analytics
TB Amati UK Smaller Companies has, however, been slightly more volatile than the average UK Smaller Companies fund over the period and lost more during the down markets of both 2008 and 2011.
With AUM of just £11m, the fund has the flexibility to invest across all small cap universes, including the FTSE AIM and FTSE Fledgling indices.
Entertainment One, the multimedia company that recently sold the Peppa Pig franchise to a major Asian broadcaster, is among its biggest holdings. The company is also a favourite with FE Alpha Manager Mark Slater, who runs the MFM Slater Growth portfolio.
Dr Paul Jourdan has headed up the fund since September 2000 and has since been joined by co-managers Douglas Lawson and David Stevenson. Industrials and basic materials are the team’s two biggest sector positions.
While Jourdan remains optimistic about the long-term potential of the UK small cap markets, in a recent note to investors he said he was watchful of problems resurfacing in the eurozone.
"It would be wrong to become complacent about the eurozone government debt crisis – this saga has many more twists and turns in it and retains the potential to derail the best-laid plans," he said.
"We will therefore proceed with caution, but will respond to good long-term investment opportunities as they arise."
According to FE data, the fund currently has 16.5 per cent in cash.
The five crown-rated portfolio has a minimum investment of £1,000 and a TER of 2.19 per cent, making it more expensive than the average UK Smaller Companies fund.
Baillie Gifford British Smaller Companies
This £190m fund is the largest of the three, but is still far smaller and lower profile than the big guns in the sector.
Like TB Amati UK Smaller Companies, it is top quartile over three, five and 10 years; however, unlike its rival, this fund also has a strong short-term record, topping its sector over one year and six months.
Performance of fund vs sector and index over 10-yrs
Source: FE Analytics
Only five UK Smaller Companies funds have returned more over the last decade.
It has a slightly larger cap focus than Jourdan’s portfolio, with significant exposure to the FTSE 250. Abcam, Rightmove and Hargreaves Lansdown – all favourites with Nimmo – are among manager Douglas Brodie’s biggest holdings.
The fund has a minimum investment of £1,000 and a TER of 1.6 per cent – below average for a portfolio in the sector.
Old Mutual Dublin UK Select Smaller Companies
This £60m fund has had a great run under recently appointed FE Alpha Manager Daniel Nickols, who was put in charge back in January 2009. Since he came to the helm, the fund has returned 111.5 per cent, compared with 104.1 per cent from its sector average.
Old Mutual Dublin UK Select Smaller Companies is top quartile over five- and 10-year periods as well.
Industrials make up the biggest part of Nickols’ portfolio, though he has more significant overweight positions in technology and consumer services. Telecity Group and Smart Metering Systems are both top-10 holdings.
The fund has a minimum investment of £1,000 and a TER of 1.94 per cent.