WS Montanaro UK Income
Previously LF Montanaro UK Income
WS Montanaro UK Income fund offers something very different from the standard UK equity income fund, given it focuses on small and medium-sized businesses. Each holding will also offer an attractive dividend yield or the potential for dividend growth. The fund's clear process and focus on research has worked consistently well over a very long period.
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Guido Dacie-Lombardo, Lead Manager Guido graduated from the University of Cambridge in 2008 with an MSci in Experimental & Theoretical Physics. He began his career at Rothschild in London, advising on mergers and acquisitions and corporate finance. After six years, he joined Montanaro in 2015 as an analyst, focusing on Software, IT Services, and Electronic Equipment. From July 1, 2020, Guido has co-managed the Montanaro UK Income Fund alongside Charles Montanaro. He is bilingual in English and Italian.
Charles Montanaro, Deputy Manager Charles graduated with an honours degree in Anthropology from Durham University in 1976. After four years in industry, he joined Merrill Lynch in 1980 as a private client broker, then moved to Dean Witter Reynolds in 1984 and Drexel Burnham Lambert in 1987, where he was a top institutional broker and worked in high-yield bonds. In 1990, he became a Director of investment banking at MMG Patricof (now Apax Partners), focusing on smaller UK companies. Charles founded Montanaro in 1991 to specialize in European smaller companies. He has launched several successful funds and served on the boards of public smaller companies.
Guido Dacie-Lombardo, Lead Manager Guido graduated from the University of Cambridge in 2008 with an MSci in Experimental & Theoretical Physics. He began his career at Rothschild in London, advising on mergers and acquisitions and corporate finance. After six years, he joined Montanaro in 2015 as an analyst, focusing on Software, IT Services, and Electronic Equipment. From July 1, 2020, Guido has co-managed the Montanaro UK Income Fund alongside Charles Montanaro. He is bilingual in English and Italian.
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Charles Montanaro, Deputy Manager Charles graduated with an honours degree in Anthropology from Durham University in 1976. After four years in industry, he joined Merrill Lynch in 1980 as a private client broker, then moved to Dean Witter Reynolds in 1984 and Drexel Burnham Lambert in 1987, where he was a top institutional broker and worked in high-yield bonds. In 1990, he became a Director of investment banking at MMG Patricof (now Apax Partners), focusing on smaller UK companies. Charles founded Montanaro in 1991 to specialize in European smaller companies. He has launched several successful funds and served on the boards of public smaller companies.
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Company Description
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Talking Factsheet
Quote from the Fund Manager
When investing in small-cap, we stick to quality. That’s why we look for companies with sound business models, good management teams and strong balance sheets that can grow their earnings and dividends for many years.
Guido Dacie-Lombardo
Lead Manager
Investment process
The team starts with a simple philosophy; invest in companies you can understand, buy things which are growing, back quality management, engage with your companies and don't over trade. Wider macroeconomic factors are ignored. The team screens for companies using its own internal quality metrics. Valuations do not form part of this initial process but are considered at a later stage. The team the invests in simple understandable businesses for the long term and is unafraid of completely avoiding complex sectors such as biotech, miners, insurers or banks. Montanaro’s analysts conduct detailed fundamental analysis on every potential holding. Only after a company has passed a number of rigorous internal tests can it be added to the approved list for potential investment. The fund is invested almost entirely in quality mid and small-cap stocks listed in the UK, but up to 20% of the may be invested in companies quoted in the EU, Iceland, Norway or Switzerland.
Risk
WS Montanaro UK Income fund will typically hold between 40 and 50 stocks at any one time – all of which are given a risk score. The fund's focus on quality has historically helped provide some downside protection in falling markets versus other small-cap funds. It also avoids stocks on AIM (the alternative investment market) which are generally considered higher-risk than shares listed on the main UK stock market.
ESG
ESG - Integrated
ESG is embedded throughout the investment process at Montanaro. Once an idea has been identified, analysts will spend several days examining the business. They will complete a “Quality Checklist”, Montanaro’s Ethical & ESG checklist, and a financial model. Ethics is scored on pass or fail of revenue exposure to certain restricted areas. Individual scores are given for E,S and G categories out of 10. A final ESG Checklist score is then aggregated. Companies with scores of 5 or below are candidates for engagement. The ESG score plays a significant role in whether a business can be added to the "Approved List" by the Investment Committee.
Companies on the Approved List will be closely monitored by Montanaro’s Sustainability Committee for their ESG scores. This gives an indication of whether companies are improving in matters of ESG. Any points of concern will be noted and engagement with the company will follow. The Sustainability Committee will consider if businesses still continue to meet Montanaro’s ESG standards and are able to challenge the approval of businesses if they fail to do so.
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