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Premier Miton Global Smaller Companies
Having joined Premier Miton from abrdn, Alan Rowsell is aiming to create the best fund in the highly competitive global sector with this concentrated portfolio of companies from the smallest 15% of firms around the world. The portfolio will look for high quality and growing businesses that are exhibiting momentum to become either leaders of their niche or the large companies of tomorrow.
Our opinion
Alan is a studious and dedicated manager, who has an admirably ambitious target of creating the best fund in the sector despite the often higher volatility of the smaller companies’ universe. He has many years’ experience, including spending time in the US, which will be supportive of the slight tweak to the process he used at abrdn and which should further drive the fund’s success.Company description
Premier Miton Investors was formed in November 2019 following the merger of Premier Asset Management Group plc and Miton Group plc. The combined company manages around £11.2 billion of assets on behalf of a wide range of individual investors and institutions. The two principle areas of focus are outcome-based, multi-asset investment, and single-strategy, active equity investment. Premier Miton was awarded the Elite Provider for Equities rating in 2021.
Fund manager
Alan joined Premier Miton in October 2020 to set up this fund. Before that he worked at abrdn, having originally joined the firm through the Standard Life side of the business in 2006, working in the US equity team in Boston. He launched the Global Smaller Companies fund in late 2011 and now has over 22 years’ experience in the industry, having previously worked at Cazenove and Singer & Friedlander. Alan has a degree in Economics from Bath University and holds IMC and IIMR qualifications. Imogen Harris is deputy manager on the fund and previously worked with Alan at abrdn.
Global small cap offers the potential for high returns but it’s important to invest in quality companies to manage the risks. We seek out the best of these companies to give investors the best bang for their buck.
Alan RowsellFund manager
Investment process
Alan focuses on three characteristics for his holdings: quality, growth and momentum. He has a truly global approach and uses a blend of quantitative and qualitative analysis to build a concentrated portfolio of firms from the smallest 15% of businesses in each country.
Alan uses a screening tool to help with the initial phase of the portfolio building process. It is similar to ‘Matrix’ which Alan used at abrdn but has been rebuilt and redeveloped to improve coverage in the US market.
The first stage looks at around 1,500 companies and aims to highlight rates of change in businesses and identify early movements in stocks. This leaves around 250 companies of interest for which Alan and deputy manager Imogen Harris will do further qualitative work – reading financial statements, meeting company management and studying sell-side research. Firms will need to show a competitive advantage over their peers that can continue for years to come, and be operating in a market that is large enough for the company to grow in.
When valuing a company, Alan finds it useful to determine what the current share price is factoring in. This helps him identify whether the market is already appreciating the future earnings power or not. Alan often finds that the market is too short-term in its forecasts and isn’t confident in forecasting the long-term growth opportunity of a company.
Finally, Alan will build the portfolio from the best 50 or so ideas in their ideas library and, as part of the risk controls, the managers will want to ensure they aren’t taking any undue factor risks, such as being reliant on one industry or driver. Alan also pays considerable attention to ESG risks when working on the fundamental analysis of his ideas which are considered a very material consideration.
ESG
ESG - Integrated
Premier Miton as a firm believes managers should have the autonomy to make their own investment decisions based on the inputs available to them, and therefore have no house view on ESG limitations. It does however believe that ESG considerations should be fully integrated into the investment process and considered alongside financial factors. This allows the managers to then make a call as to what level of risk they are prepared to take. For this fund, Alan builds in ESG research as part of his fundamental analysis of a company. He wishes to identify risks that are financially material to a business, as well as finding opportunities with firms offering solutions to ESG challenges. Some smaller companies are often emerging leaders in tackling problems such as those posed by current environmental and social issues. Alan uses the ESG analysis to help identify companies that are delivering these solutions and therefore will have strong drivers to performance. Alan’s philosophic focus on quality also includes looking for good management teams, which will lead to a focus on governance within the process. Management teams in smaller companies often have a larger impact on a business’ prospects, so this is of particular importance in this area of the market.
Risk
Position sizes will start at around 2% though may be up to 2.5-3% in higher conviction ideas with lower risk profiles. These positions will be allowed to run up to 5% where they will then start to be trimmed.
The Premier Miton Global Smaller Companies fund will have 100% in small cap companies at launch but will allow the best ideas to run. If they do, Alan will allow up to 20% of the fund to be in companies outside of the small cap index as they outgrow it, though he won’t be making any purchases or additions at this level.
The fund will likely have a quality growth bias, but Alan will look to increase his weight to more cyclically sensitive sectors when he feels the economic support is there for an expansion. Due to this quality bias, the fund is expected to underperform in value driven rallies. It is also expected to be towards the more volatile end of the sector due to the smaller companies focus.
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