Standard Life Investments today revealed that its European Smaller Companies Fund (SICAV) hit the five year mark and now sits at the top of the Morningstar Offshore Europe Small-Cap Equity Sector.*
Since it was launched on 26 September 2007 the fund, managed by Ken Nicholson, has generated a return of 22.8% (institutional share class) versus a sector average of -20.2%. The fund has also achieved top quartile performance over one, two, three and four years. **
The strong performance has gained further recognition amongst the independent rating agencies. The fund has been awarded a bronze rating for the first time by Morningstar OBSR based on their confidence in the manager and investment process. It also has a Gold rating from Standard & Poor's, and Citywire has awarded Nicholson with an AA rating. ***
Ken Nicholson has managed the fund since launch, using a distinct Small Cap proprietary screening tool, whilst collaborating closely with other Standard Life Investments Equities teams. He invests in a concentrated portfolio of around 40 stocks of which 28 per cent are currently listed in Sweden and Germany.****
According to his experience, within the European smaller company universe there are a number of ‘hidden champions' which are market leaders in their field, but generally unknown and under-researched by many analysts due to their small market capitalisation. Nicholson's mission is to seek out and analyse these opportunities, which entails many personal visits throughout Europe, and he admits:
"When it comes to Small Caps, you have to kiss a lot of frogs to find a prince among them. But I love the feeling when I come away from a visit to a company and know that we've uncovered a real gem.
"Europe has a number of world class companies operating in many fields if you look beyond the headline problems of the Euro. Some businesses are market leaders in their sectors, with a large proportion of sales outside Europe, and proven ability to withstand macroeconomic headwinds. They are reporting strong earnings and benefiting from growth in global markets such as Japan, the US and Emerging Markets, and in some cases from a weaker Euro.
"Recently investors have turned a blind eye to Europe and Small Caps in particular, at a time of increased volatility and challenges for smaller businesses. But I think people are starting to wake up to the exciting opportunities the market is now offering. And if you have a robust investment process and stock-picking philosophy, you can still make money in this environment."
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