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IFSL Marlborough European Special Situations Fund
This fund invests in European businesses of all sizes but focuses on the continent's minnows. It is managed by David Walton, who is part of the outstanding smaller companies team at Hargreave Hale. This is a true stock picker’s fund with David scouring the market for under the radar opportunities.
Previously Marlborough European Multi-Cap
Our opinion
Marlborough European Multi-Cap fund offers access to much smaller companies than many of its peers. These businesses are often overlooked and hence have the potential to outperform. We consider the team an expert in small-cap investing, having built a stellar track record in this space, and the manager of this fund has been very successful at mitigating the risks that are typically associated with smaller companies.
Company description
Marlborough Fund Managers offers investments across various asset classes, ranging from UK fixed interest to international equities and exchange traded funds (ETFs). It was awarded the Elite Provider for Equities rating each year from 2016 to 2021. Marlborough’s managers are hand-picked and given freedom to invest as they feel optimal in the fund’s sector.
Hargreave Hale, who are investment managers for some of Marlborough’s funds, are a merger of Hargreave Investment Management and Hargreave Hale & Co, the former having been founded in 1986. The management of this fund is outsourced to the Hargreave Hale team, who are recognised specialists in the small-cap space.
Fund manager
David Walton graduated with a first-class degree in Economics from the University of Cambridge before joining M&G, where he specialised in European small and medium-sized companies. He moved to Baillie Gifford in 2000, where he ran European small-cap portfolios. David joined Hargreave Hale in 2013 and has managed the Marlborough European Multi-Cap fund since October that year. David is supported by equity analyst Tom Livesey.
I’m a stock-picker first and foremost and I want to see three clear qualities in a company: first-class management, strong growth prospects and a share price that doesn’t yet reflect its potential.
David WaltonFund manager
Investment process
David believes that lesser known quoted companies tend to be more attractively valued than household names, and these are usually found amongst small caps. David looks for undervalued stocks with above-average growth potential and strong management teams. He meets with a lot of companies and looks closely at how management is incentivised. His approach is typically long-term and low turnover, with many of the micro-caps in the portfolio moving up into the small-cap universe. The portfolio is diversified across sectors and countries.
ESG
ESG - Limited
David has a strong focus on governance with this fund. This is particularly important in the smaller companies space, as management decisions can have a significant impact on a business’ operations and outcomes. As such, David has a considerable look at the management teams behind potential investment companies and how they treat employees, suppliers and customers, as well as their attitude towards their company’s impact on wider society. David engages with managers as a vital part of the process, but is not an activist investor when it comes to enacting change. He uses this analysis to make a qualitative judgement of a company’s ESG profile which he will consider as part of an overall picture when looking to make an investment in a company.
Risk
Marlborough European Multi-Cap fund is lheavily invested in smaller companies, which can prove to be higher risk and more volatile than larger ones. The fund manager aims to lower volatility by running a diversified portfolio at a country and sector level.
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