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Franklin UK Smaller Companies Fund

Ross Brookes from our Collectives Team has been looking at alternatives following Schroders decision to hard close Paul Marriage's Cazenove UK Smaller Companies Fund...

by
Ross Brookes

in Fund Management

28.11.2013

Schroders is to hard close Paul Marriage’s Cazenove UK Smaller Companies fund with effect from 22nd January 2014. The closure is something we had anticipated for some time and have been actively looking for suitable alternatives, of which there are a vast number to choose from. We have met with the fund managers of Franklin UK Smaller Companies, Paul Spencer and Richard Bullas, a number of times recently. The previous manager of this fund had an inconsistent track record and the move to install Spencer and Bullas in June 2012 has been a positive move by Franklin Templeton. The fund is managed in a pragmatic fashion with no deliberate style bias  and hence can be held throughout the cycle. The fund holds between 40-50 names, concentrated in the £100m to £1bn market cap space. The managers aims to outperform the Numis Smaller Companies (ex ITs) Index over the medium to longer term and in doing so expect to generate top quartile performance within the IMA UK Smaller Companies peer group.

Ideally, we like our small cap managers to have the flexibility to invest where they see value. The sweet spot for small cap investing is often a sub £100m portfolio run by an experienced management team. Given the concentration of manager selection in the wealth management industry, finding funds with these characteristics is becoming increasingly rare. The small pool of assets managed by the team give it a distinct advantage over many of the more established and larger peers. Paul Spencer, in particular, is a well-respected fund manager with a good track record on the Franklin Templeton mid cap fund. Investment into smaller companies has historically been volatile and hence any investment in this area needs to be on a long-term basis and will not be suitable for everyone.

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