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Investment Trust

F&C Global Smaller Companies

Elite Rated by FundCalibre

This trust aims to achieve a high return by investing in small companies from around the world, which the manager believes have much faster growth potential than large companies. Its goal is to go where other equity researchers do not to find hidden gems at good prices. F&C’s small company specialists have a well-disciplined investment process and the trust has a strong track record of beating the market.

Investment Manager


F&C is an investment manager with a history stretching back to the nineteenth century. It is a wholly-owned subsidiary of Bank of Montreal (BMO) and is part of BMO Global Asset Management, which specialises in equities, bonds, property and multi-asset investing.

Peter Ewins is the lead manager of the trust. Prior to joining F&C in 1996, he worked for various insurance firms, as well as in pension management. Peter has a Bachelor of Arts (Hons) in Economics and Statistics from the University of Exeter. He is supported by F&C’s specialist small companies team of six, whose members have an average of seventeen years’ industry experience apiece.


My colleagues would say I am a born pessimist and that sometimes helps when considering the risks in small-cap investing, but the real joy of the job is the scope to unearth some of the next generation of winning business franchises.

Peter Ewins - Trust Manager

Investment Trust Board

The trust has a six-member board, headed by Anthony Townsend, who has worked in London’s financial centre for more than 45 years. He was chairperson of the Association of Investment Companies from 2001 to 2003 and holds numerous other directorships on investment trust boards. The remaining board members are Jo Dixon, Andrew Adcock, David Stileman, Anja Balfour and Jane Tozer, all of whom have in-depth experience of investment trusts and directorships. The company year end is 30 April.

The Investment Process

Peter and his team believe that picking the right stocks is far more important than being invested in the right sectors of the economy or in the right countries. They look for companies with strong franchises and good quality, motivated management, whose shares are, in the team’s opinion, not expensive. Ideas come from many different sources and each team member will contribute, although ultimately the decision to buy or sell rests with Peter.


The manager invests in small companies, which tend to be higher risk than larger companies. As with most trusts, this one borrows money to invest (i.e. uses gearing), which also increases risk levels for shareholders. However, the manager’s deep and disciplined research process, along with a long list of stocks (around 190 to 200), does offer diversification and mitigate the smaller companies risk somewhat. Because the trust invests globally, investors should also be aware that fluctuations in the value of sterling may impact performance.


The board believe that structural gearing over the long term can enhance returns to shareholders. That said, they closely monitor gearing levels to ensure that they remain within parameters set in the investment policy, which currently allows for a maximum gearing of 20% of shareholders’ funds. In the last ten years (to 30 April 2016), gearing has fluctuated between 2.2% and 7.5% of the value of the portfolio.

Share price discount/premium

The board prefer the share price to track the net asset value (NAV) of the company as closely as possible. They do not have a discount control policy in place, but they can issue shares up to 10% of the value of the portfolio to control the premium, or buy back shares to reduce the discount to NAV if needed. Looking at the ten-year history (to 30 April 2016), the share price has traded between a discount of 11% and a premium of 1.1%. However, it is worth noting that since 2013, the share price has been trading either at, or at a small premium to, NAV.

Our Opinion

Small-cap stocks have traditionally outperformed their larger counterparts over the long term and this fund offers diverse exposure to that potential across international markets. Peter and his team have demonstrated that they have a repeatable process, which has worked well and consistently over many years. For investors that have an appetite for the potential returns of smaller companies, and are aware of the additional risks in this part of the market, we think this fund could be an excellent addition to a portfolio.

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