Lincoln Unit Trust Managers has established the UK equity growth trust, a unit trust which invests in a portfolio of between 50 and 100 small and mid cap stocks in the UK.
The trust is also available within an Isa wrapper and is managed for Lincoln by Goldman Sachs Asset Management. Stocks will be selected by a fund management team headed by Suzanne Tavill on a bottom-up basis. They will look for individual companies that appear to have the ability to grow and that can survive in a niche market, while adapting to any changes in their own markets.
To identify these stocks, the fund management team will visit around 200 companies each year to assess the prospects of each company and form a view of the industries they are in.
The appeal of small and medium-sized UK companies currently lies in the greater growth potential they have compared to large companies. Larger companies often have headquarters around the world and are influenced by the global economy, not just the UK. On the other hand, smaller companies are more likely to be affected by UK interest rates and stockmarket movements. They will be in the front line when investment conditions are favourable just as they are hit hardest during a downturn.
Smaller companies are also less researched compared to larger companies and this could be beneficial when fund managers are trying to find the best opportunities. However, the market is becoming competitive and it may be difficult to find the right companies as more providers want a piece of the action.
According to Standard & Poor's, the Lincoln growth fund is ranked 156 out of 242 funds based on £1,000 invested on a bid-to-bid basis with net income reinvested over three years to January 11, 2002.