The fund aims for growth by investing in 40 to 80 stocks. It will tap into the greater growth potential of smaller companies relative to bigger companies, combined with the diversity and greater number of investment opportunities that a global approach brings.
The fund will be jointly managed by the firm’s head of smaller companies, Harry Nimmo and investment director Alan Rowsell. Nimmo has 26 years experience at Standard Life Investments. Rowsell recently joined the team following five years as a US equity portfolio manager in Standard Life Investments’ Boston office.
Although the problems in Europe are affecting all asset classes and markets, SLI says it is possible to find high quality growth business at modest valuations because the market is already pricing in bad news. The firm says smaller companies are less correlated to the global economy so are able to deliver strong earnings and growth regardless of what is happening in the global economy.
The team looks for companies in high growth sectors with quality business models and strong cashflows. Matrix, a quant-based screening tool, helps to create a shortlist of potential stocks to analyse further through company meetings. Companies that make it into the portfolio will be those with the potential to grow into the big companies of tomorrow.
Nimmo has built up a strong reputation in managing the SLI UK Smaller Companies Fund. Access to his skills on a global basis may be tempting for some advisers and their clients. However, IFA firm BestInvest prefers regional small cap funds. These benefit from their managers’ detailed analysis of under-researched companies and knowledge of local market conditions, which may not be possible with a global remit.