Diversification is not a buzzword – it’s a necessity
Investing is often likened to a journey, with the destination being financial success. Along this...
Appointed with the task of taking Britain through Brexit, Mrs May has got her work cut out for her. As our new prime minister approaches her 100 days in office¹, FundCalibre looks at how UK stocks have fared under her leadership. So far, at least, smaller companies have done surprisingly well.
Nine of our top ten Elite Rated UK and European equity funds over the 100 days invest in smaller companies. Seven are invested solely in the UK. Top of the table is the R&M UK Equity Smaller Companies fund, which has returned 15.6%², followed by Old Mutual UK Smaller Companies with 14.6% total returns² and Marlborough UK Micro Cap Growth with 14.5%².
While the main news headlines have focused on how the UK’s top 100 companies’ share prices (measured by the FTSE 100 index) have benefited from the falling pound, the UK’s smaller, more domestically-focused businesses have also been producing some pretty decent returns.
The FTSE Small Cap index has outperformed the FTSE 100 by around a third³. Actively managed smaller companies funds, such as those rated by FundCalibre, have, on average, managed to post double the returns of larger and multi-cap competitors.
UK investors could also have done well out of European smaller companies funds, although a good 50%⁴ of these returns are due to the currency movements.
|Position||Top ten Elite Rated UK and European equity funds||Returns (%)2|
|1||R&M UK Equity Smaller Companies||15.56|
|2||Old Mutual UK Smaller Companies||14.62|
|3||Marlborough UK Micro Cap Growth||14.47|
|4||T. Rowe Price European Smaller Companies Equity||14.47|
|5||Liontrust UK Smaller Companies||13.86|
|6||Baring Europe Select||13.61|
|7||Mirabaud Equities Europe Ex UK Small & Mid||13.07|
|8||Marlborough Special Situations||12.25|
|9||Unicorn UK Smaller Companies||11.91|
|10||R&M UK Equity Long Term Recovery||10.76|
|Sector average/market||Returns (%)3|
|IA European Smaller Companies||11.97|
|IA UK Smaller Companies||11.89|
|IA Europe ex-UK||10.23|
|IA UK All Companies||6.40|
|IA UK Equity Income||6.40|
|MSCI Europe ex-UK||10.45|
|FTSE Small Cap ex-IT||9.93|
¹Theresa May was appointed Prime Minister on 13 July 2016. Her 100 days will be 21 October 2016
²Source: FE Analytics: Total returns in sterling of Elite Rated UK and European Equity funds, 13 July 2016 to 17 October 2016
³Source: FE Analytics: Total returns in sterling of FTSE Small Cap ex IT index and FTSE 100 index, as well as the IA sector averages, 13 July 2016 to 17 October 2016
⁴Source: FE Analytics, Total returns in sterling compared with total returns in euros, 13 July 2016 to 17 October 2016