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One of my favourite investment groups is international bond and equity specialist Guinness Flight Hambro. It has a good record of launching funds at the right time.

For example, in early 1994 it launched a global privatisation fund which is now one of the top performers in the international growth sector.

Guinness Flight now thinks the time is right for investing in smaller companies, and I agree with it.

Smaller companies as a group have underperformed during the equity bull market of the 1990s and now stand at lower valuations than the main index stocks despite better earnings&#39 prospects.

Smaller companies also tend to generate better performances during periods when global growth is strong.

In particular, growth is now picking up in the continental European economies after a prolonged downturn which has resulted in many smaller companies being undervalued.

Smaller companies are also under-researched and so there are some good bargains to be had. Therefore, the launch of two smaller-company funds by Guinness Flight – global smaller companies and European smaller companies – is the right decision now.

Of the two, I prefer the European Smaller Companies fund. Guinness Flight is offering a 2 per cent discount on both funds until January 30, 1998.

I believe that well managed smaller-companies funds will outperform tracker funds over the next year or so because I think that the large-capital stocks have had a particularly good run and many of them are now overvalued in relation to smaller companies&#39 stocks. I do believe that Guinness Flight has got the timing right again and that both these funds are worth a place in most portfolios.


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