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The managers of Elite Rated Marlborough Special Situations fund are to be given greater freedom to hold mid-cap and large-cap companies.
From the start of August 2021 co-managers Eustace Santa Barbara and Guy Feld will have more freedom to ‘run their winners’ as companies grow and move up the market cap spectrum. In order to facilitate this, the fund will move from the IA UK Smaller Companies sector to the IA UK All Companies sector.
Under the fund’s investment policy, the managers are currently required to hold at least 80% of the fund in UK smaller company equities. This will be updated to a minimum of 60% from 2nd August 2021.
The changes, which have been approved by the Financial Conduct Authority, will also give the investment team greater freedom to identify exceptional opportunities among large-caps and the bigger mid-cap companies.
Richard Goodall, CEO of Marlborough, said: “The success of Marlborough Special Situations has been built on a tried and trusted investment strategy, a key tenet of which is ‘run your winners’. The investment team identify smaller companies with exceptional potential and then stick with them as they prosper and grow.
“Over the years that’s meant the number of larger companies in the portfolio has increased, as outstanding smaller companies grow and become mid-cap and large-cap businesses.
“Clearly we don’t want the team to be forced to trim or sell out of positions in companies they know well and believe have bright prospects for the future. So, we’re updating the fund’s investment policy so they can continue to hold these outstanding businesses as they go from strength to strength.
“It’s worth emphasising though that UK smaller companies will continue to be the primary focus for the investment team. They’re firm believers that the sheer number of smaller companies, their innovative, agile nature and lower levels of analyst cover combine to make the lower end of the market cap spectrum a highly fertile hunting ground for stock-pickers.”
Santa Barbara and Feld also co-manage two funds that will remain in the IA UK Smaller Companies sector: Elite Rated Marlborough UK Micro-Cap Growth and Marlborough Nano-Cap Growth. Marlborough UK Micro-Cap Growth holds at least 80% of its portfolio in companies with a market capitalisation of £250 million or less when the initial investment is made.
Juliet Schooling Latter, research director of FundCalibre added: “While the fund is moving sector, I see it more of a tweak to the mandate than a big change in style. It will still be run with the same philosophy and investment process buying quality small companies that can grow into medium and large companies over time. The fund will therefore maintain its Elite Rating.”