The River and Mercantile fund invests in a portfolio of 60 to100 smaller companies, including stocks listed on the Alternative Investment Market.
Fund manager Dan Hanbury’s stock selection is based on River and Mercantile’s PVT philosophy – potential, valuation and timing – to identify price anomalies and assess the likelihood of a rise in share prices over the medium term. This is based on a similar strategy developed by the company’s head of UK equities Hugh Sergeant when he was at SG Asset Management.
Large caps have recently outperformed but WdB is keen to have some exposure to small and mid-caps. It says mid-caps have outperformed marginally over the last month but warns that high short-term volatility can skew statistics.
The River and Mercantile fund was included in WdB’s portfolios partly on the basis of Hanbury’s track record at Investec and Schroders and partly due to the boutique nature of River and Mercantile.
WdB deputy fund manager Becky Williams says: “River and Mercantile as a whole is motivated in building a team of talented managers that are incentivised to perform. When we are looking at a small-cap fund, we think its best to buy in when the fund is small, so that we get the maximum returns.”