MONTANARO EUROPEAN SMALLER COMPANIES TRUST: Fund finds big returns from its small firms
By JEFF PRESTRIDGE, FINANCIAL MAIL ON SUNDAY
PUBLISHED: 21:53, 23 January 2021 | UPDATED: 11:46, 24 January 2021
London-based investment manager Montanaro eats, sleeps and breathes ‘good’ smaller companies.
Its investment view is simple: smaller companies offer the potential to deliver investors stellar long-term returns, especially if they are also run with a firm eye on the environment, adopt fair work practices and do not promote boardroom greed.
It’s a philosophy that underpins the £3billion of assets Montanaro runs on behalf of investors – with all its funds and trusts having at least 60 per cent of their investments in ‘good’ smaller firms.
A team of 11 in-house analysts constantly scour the world in search of hidden investment gems that the managers can then include.
Nowhere has this commitment to minnows proved more successful than at investment trust Montanaro European Smaller Companies.
The performance of this £282million fund over the past year in the face of the pandemic storm – an overall return of 44 per cent – has been exceptional and is far superior to other trusts specialising in this particular area.
Its three and five-year investment records also knock spots off its competitors.
The manager is George Cooke, who has had a hand on its tiller for the past eight years. He is keen to play down his role in its success…
Cooke, who has his own money in the trust, says most of the businesses in the portfolio are immune to any fallout from the recent Brexit deal.
The bigger ‘risk’, he believes, is future underperformance against rival funds. This tends to happen when stock markets are in bullish mood and do not put a price premium on the kind of quality companies he prefers.
It’s a point also made by James Carthew, head of investment trusts at research company QuotedData.
He says: ‘A focus on quality may mean you get left behind as a fund manager when investors are engaged in a ‘dash for trash’. But over the long term, the quality approach adopted by Cooke should pay off.’
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