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IFA guide focuses on smaller company potential

Smaller company unit trusts are expected to continue to outperform their bigger company counterparts, according to the David Aaron Partnership.

The IFA is this week launching a new guide to UK and European smaller company unit trusts.

The guide features analysis from fund managers on the outlook for the future and details their favourite shares.

It says smaller company fund managers have widely varying performances, with the best producing returns of over 100 per cent in the past five years against a sector average of 60 per cent. The poorest performers have seen a rise of less than 20 per cent over five years.

The IFA believes that, at current valuations and with economic conditions favouring well-managed smaller companies, shares picked by top smaller company fund managers are likely to outperform their bigger counterparts.

Chairman and chief executive David Aaron says: “We have been recommending smaller companies for the past five years, a period over which the average European smaller companies unit trust has gone up by 80 per cent, while the average UK smaller companies fund has increased by 60 per cent.

“We expect smaller companies in both Europe and the UK to continue to outperform tracker funds and most bigger company unit trusts.”

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