Cazenove Closes Top Smaller Companies Fund

Cazenove has closed its UK Smaller Companies fund to all new investment after a surge popularity brought the fund value to £1 billion

Emma Wall 22 November, 2013 | 10:17AM
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Small and mid-cap stocks have thrived over the past two years - far out-performing their larger peers. 

Investors keen to get a slice of the profit have poured cash into the small cap sector, and in particular Paul Marriage's highly successful Bronze rated Cazenove UK Smaller Companies fund. As a result, the fund, which has returned 42% this year alone, has rapidly swollen in size and now totals £1.06 billion. 

While larger company funds such as the £10 billion Invesco Perpetual Income, which is currently Under Review, can stomach these sorts of inflows, smaller company funds can struggle to invest such deposits of cash. In a bid to protect existing investors from liquidity issues, the manager has hard closed the fund - meaning no new investments can be made from January 22, 2014.

Cazenove was bought by rival asset manager Schroders earlier this year, and Marriage's fund was touted as one of Cazenove's strongest assets. 

Robin Stoakley, managing director UK intermediary at Schroders, said that decision was made to close the fund in order to maintain its integrity and performance. 

“The fund is consistently top 10% of the sector and the decision to close the fund was taken to protect the returns that existing investors have seen in recent years and to ensure that the fund’s objective is delivered,” he said. 

Marriage added that the closure gives the management the best possible opportunity to maintain their long term record.

Adrian Lowcock at Hargreaves Lansdown said that the closure would come as a disappointment to investors but if the fund was allowed to get larger its size could have a detrimental effect on performance.

He said existing investors should stick with the fund.

“The smaller companies sector is under-analysed. Each company might only have one or two analysts covering it which creates opportunities for eagle-eyed fund managers to spot hidden gems. Selecting the winners is no easy task and there are only a few excellent managers who can add value,” he said.

Alternative Smaller Company Funds

There are three top-rated smaller company funds: the Gold-rated Aberforth UK Small Companies, which despite recent underperformance, analysts have confidence in. Old Mutual UK Smaller Companies which is also Gold-rated, and Artemis UK Smaller Companies, a Gold-rated fund run by Mark Niznik.

 

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About Author

Emma Wall  is former Senior International Editor for Morningstar