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Montanaro UK Income
This income fund offers something very different from the standard mega-cap UK equity income fund, given it focuses on small and medium-sized businesses. The fund's clear process and focus on research has worked consistently well over a very long period.
Our opinion
Charles and the team thrive as small-cap specialists, and have an excellent long-term track record to prove it. Montanaro benefits from a vast and experienced small-cap team, which means it can produce its own high-quality research rather than relying on external brokers.
Company description
Montanaro is a smaller companies pan European specialist renowned for its large team of analysts and high quality small-cap research. The firm was founded by Charles Montanaro in 1991 and now looks after over 3 billion euros for clients. It is private and independently owned.
Fund manager
An industry veteran, Charles Montanaro has grown his company from scratch to become one of the most respected small-cap asset managers in Europe. He has delivered excellent outperformance over a long and distinguished career. He is a real character and his search for hidden gems goes well beyond company research – he often 'holidays' looking for undiscovered tribes in the Amazon!
Find the hardworking, honest entrepreneur with skin in the game, the “good guys”, and you will do fine.
Charles MontanaroFund manager
Investment process
The fund invests entirely in quality mid- and small-cap stocks, many of which are niche businesses in growing markets. 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 invests in simple understandable businesses for the long term and it is unafraid to completely avoid complex sectors such as biotech, miners, insurers or banks.
Risk
The 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 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.
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