Finance

10 years of big performance for UK Smaller Companies Fund

10 years of big performance for UK Smaller Companies Fund

04 January 2007

Leading fund manager, Standard Life Investments is set to celebrate the 10th anniversary of its award-winning, UK Smaller Companies Fund. The £229m fund, which launched on 6th January 1997, has returned top decile performance over one, three and six months, one, two and three years and has returned top quartile performance over five and seven years1.

Ranked number one fund in the IMA sector over three and six months, one and two years and number two over three years (to a fund which is no longer open to new business), the UK Smaller Companies Fund returned over 40% to investors over the past year2 – a figure which represents twice that of the sector average (20%)1. Since launch, the fund has produced an annualised return of almost 16%2 despite three years of bear markets from 2000-2002. The fund’s impressive performance has been achieved at a lower volatility than that of the sector mean1.

Jacqueline Kerr, Head of Mutual Fund Investments at Standard Life Investments, said:

“The UK Smaller Companies Fund is one of our top selling UK equity funds and it is not hard to see why. It boasts an ‘AA’ rating from both Standard & Poor’s and Forsyth OBSR and its manager, Harry Nimmo was named ‘What Investment Unit Trust Manager of the Year 2006’2.

“The performance of the fund benefits in particular from the rigorous stock selection skills deployed by fund manager and Head of UK Smaller Companies, Harry Nimmo and his experienced investment team. Overall, Harry and his team aim to produce an investment performance which is consistently above the average fund in the IMA UK Smaller Companies sector for periods up to one year and to be in the top quartile for any longer periods. With a decade of strong performance behind them, I am confident that the fund will continue to deliver impressive returns for investors.”

Harry Nimmo, fund manager and Head of UK Smaller Companies at Standard Life Investments, said:

“The long-term outlook potential for the smaller companies sector is still strong with the underlying trading environment remaining intact, so we have every confidence that the success of this fund will continue. The fund aims to provide capital growth over the longer term where income is not necessarily our primary consideration.

“Our stock selection process is crucial to the success of the fund. We aim to identify improving situations which are not fully recognised by the market, using the starting point that earnings growth generally drives share prices. We look for situations where we believe the consensus opinion to be wrong.

“The dynamic environment of the stock market necessitates the use of a range of indicators. Smaller companies are less well researched and so meeting with company management and site visits are extremely important to us. Indeed, during the last year alone the team as a whole has met with over 450 companies in order to really get to grips with a company’s potential. The fund tends to hold between 50 – 70 stocks with each holding big enough to have an impact on the overall performance of the fund.”

1 Standard & Poors Micropal, bid-bid, for the period to 1 December 2006
2 Standard Life Investments won the ‘What Investment’ Unit Trust Manager of the Year Award for its UK Smaller Companies Fund – based on its consistent out-performance over the last year. Managed by Harry Nimmo, Head of UK Smaller Companies, the fund provided investors with a return of 45.4% versus a sector average return of 25.4% (Source: Trustnet over one year until 31st March 2006, bid-to-bid, net income reinvested.)

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