3 Top Rated UK Smaller Companies Funds

Many experts are feeling bullish on the domestic market, as Brexit negotiations move on. Here are three funds which give investors the access to the UK economy

Emma Wall 18 January, 2018 | 1:03PM
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Britain is open for business, Prime Minister Theresa May declared last January – just before she lost the General Election designed to give her the gravitas to deliver Brexit. But while the PM’s strength has wobbled over the past 12 months, British business has been on a surer footing. The UK manufacturing sector had the best quarter since 2014 in the last three months of 2017 according to Markit/Cips PMI, and the weak pound has proved enticing to foreign investors.

While we may not have a Brexit deal to go with our divorce bill just yet, many experts – including the Queen’s own bank Coutts – are casting off their concerns about UK Plc, and predicting Britain will emerge stronger from the schism. If you share the view that the domestic economy is going places, here are three highly rated UK smaller company funds to help you play the theme.

Old Mutual UK Smaller Companies

Old Mutual UK Smaller Companies continues to be a strong offering within the small-cap category, says Morningstar analyst Simon Dorricott. Daniel Nickols is an experienced small-cap investor and has run this fund for more than 13 years. His involvement goes back even further to 2001 when he worked alongside the previous manager, Ashton Bradbury. Nickols has headed up the UK mid- and small-cap team since 2009 and is well-supported by his team of six individuals.

SLI UK Smaller Companies

We believe Standard Life UK Smaller Companies remains a worthy choice for investors, says Morningstar fund analyst Sam Meakin. A key factor in our conviction is fund manager Harry Nimmo. He is an experienced UK small-cap investor who has managed money in this style through a variety of market cycles. He has managed this fund since its launch in January 1997 and has remained true to his investment philosophy throughout.

Overall, there are several positives here: the experience and longevity of the manager, the backing of the dedicated small-cap team, the consistently applied approach, and the strong long-term track record. 

River & Mercentile UK Equity Smaller Companies

The starting point of the process is R&M’s quant screen, which the manager uses to focus his and the analysts’ efforts on the stock ideas most worthy of further analysis, explains Meakin. The model has three main factors: potential, valuation, and timing. Within potential, stocks fall into one of four categories: growth, quality, recovery, and asset-backed, depending on where a company is in its life cycle.

Meeting company management and internal debate within the team also form part of this verification stage before an investment decision is made. The approach is similar to the one fund manager Philip Rodrigs employed successfully at Investec, where the investment process also involved an initial quantitative screen combined with qualitative analysis.

 

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
abrdn UK Smaller Companies Inst S Acc111.60 GBP0.54Rating
ES R&M UK Listed Smaller Coms B Acc2,967.88 GBP0.12Rating
Jupiter UK Smaller Companies I GBP Acc2.73 GBP-0.24Rating

About Author

Emma Wall  is former Senior International Editor for Morningstar

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