5 October 2016
Good things come in small packages: Elite Rating awarded to two hidden gems
The Ashburton India Equity Opportunities and Hermes US SMID Equity funds have each gained an Elite Rating from FundCalibre.
Darius McDermott, managing director of FundCalibre said: “Both these funds look beyond just the big names in their stock markets, scouring the opportunities amongst smaller and medium sized companies to find the best growth ideas. With just £500m assets under management collectively, the funds themselves are also small and nimble – proving in more ways than one that bigger isn't always better.”
Whilst the Indian stock market is dominated by large companies, the team of three managing this fund believe that many strong growth prospects can also be found in smaller and medium sized companies outside the index. They observe and analyse the economy first before looking for individual stock ideas across different industries. They have courage in their conviction with a concentrated portfolio of just 20-30 stocks, just over half of which are large cap, a third mid cap and the remainder small cap. We like the managers’ prioritisation on investing in well-managed companies that have the interests of the minority shareholders front of mind.
This fund invests solely in US small and medium-sized companies. The manager, Mark Sherlock, starts by looking at the Russell 2500 index and removing any companies with high debt, those that need a lot of reinvestment and those whose products and services can be easily replicated. He will then look at the quality and consistency of earnings before assessing valuations. Against a market notoriously difficult to beat, Mark has built an enviable track record, and the lower risk approach to the otherwise higher risk investment area of small and mid caps is grounded by a solid and understandable process with sensible constraints, but enough flexibility to give the fund a great opportunity to excel.
©2016 FundCalibre Ltd. All Rights Reserved. The information, data, analyses, and opinions contained herein (1) include the proprietary information of FundCalibre, (2) may not be copied or redistributed without prior permission, (3) do not constitute investment advice offered by FundCalibre, (4) are provided solely for informational purposes and therefore are not an offer to buy or sell a security, and (5) are not warranted to be correct, complete, or accurate. FundCalibre, shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, this information, data, analyses, or opinions or their use.