I have always been a fan of UK smaller companies. The area is under-researched and, until two years ago, deeply unfashionable. What I really like are new funds run by top managers.
Enter Ashton Bradbury and Old Mutual who have just launched a UK select smaller companies fund.
Ashton is a hugely experienced small-cap manager, running top-performing funds at HSBC and Hill Samuel. Much of his good performance was over a time when small caps were out of fashion.
The key to his approach is flexibility. This will not be a dressed-up tech fund but much more a core UK smaller company proposition. Ashton is more a business cycle manager exploiting stocks and sectors as the cycle progresses. It will have both growth and value represented.
The fund has plenty of latitude with stocks between £50m to £1bn although it may go below £50m. The expertise of Justin Jordan, a recent recruit from Beacon Investment Fund, in the Aim market should be invaluable. The upper figure is important because this will enable the fund to run the winners rather than sell them as they enter the FTSE 250.
The investment style is a blend of top-down macro factors with bottom-up stock selection. It will be relatively concentrated, with around 40 stocks to begin with, perhaps broadening out to around 60 later.
I believe most smaller company funds hit a wall at around £300m in size, making them difficult to manage, which is one of the reasons why I like new funds which will be small and nimble.
Mark Dampier is head of research at Hargreaves Lansdown