Good things come in small packages: Elite Rating awarded to two hidden gems

The Ashburton India Equity Opportunities and Hermes US SMID Equity funds have each gained an Elite Rating from FundCalibre.

Darius McDermott, managing director of FundCalibre said: “Both these funds look beyond just the big names in their stock markets, scouring the opportunities amongst smaller and medium sized companies to find the best growth ideas. With just £500m assets under management collectively, the funds themselves are also small and nimble – proving in more ways than one that bigger isn’t always better.”

Ashburton India Equity Opportunities

Whilst the Indian stock market is dominated by large companies, the team of three managing this fund believe that many strong growth prospects can also be found in smaller and medium sized companies outside the index. They observe and analyse the economy first before looking for individual stock ideas across different industries. They have courage in their conviction with a concentrated portfolio of just 20-30 stocks, just over half of which are large cap, a third mid cap and the remainder small cap. We like the managers’ prioritisation on investing in well-managed companies that have the interests of the minority shareholders front of mind.

Hermes US SMID Equity

This fund invests solely in US small and medium-sized companies. The manager, Mark Sherlock, starts by looking at the Russell 2500 index and removing any companies with high debt, those that need a lot of reinvestment and those whose products and services can be easily replicated. He will then look at the quality and consistency of earnings before assessing valuations. Against a market notoriously difficult to beat, Mark has built an enviable track record, and the lower risk approach to the otherwise higher risk investment area of small and mid caps is grounded by a solid and understandable process with sensible constraints, but enough flexibility to give the fund a great opportunity to excel.

The views of the author and any people interviewed are their own and do not constitute financial advice. However the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions. Before you make any investment decision make sure you’re comfortable and fully understand the risks. If you invest in fund or trust make sure you know what specific risks they’re exposed to. Past performance is not a reliable guide to future returns. Remember all investments can fall in value as well as rise, so you could make a loss.