Legg Mason Investments has brought out the Legg Mason US smaller companies fund, an Oeic aiming for growth by investing in US companies with a market cap of up to $2bn.
The fund is managed by Royce & Associates, a New-York-based subsidiary of Legg Mason Investments. Royce & Associates already manages Legg Mason's Dublin-domiciled Royce US small cap equity fund but this fund was recently closed to new business.
The new fund aims to have less than 15 per cent in micro-cap stocks with a market cap of up to $400m. The offshore fund invests between 55 and 75 per cent in micro caps.
It is managed by Chuck Royce, Royce & Associates president and chief investment officer, with more than 30 years' experience as a small and micro-cap portfolio manager. When selecting stocks for the new fund, Royce will use a bottom-up value style. Companies that make it into the portfolio will be those that are trading below what Royce considers their true worth. He will look for stocks with low valuations that look set to improve as a result of changes within their sectors.
Small-cap funds historically perform well during an economic recovery and, according to Standard & Poor's, US small caps performed well compared with large caps at the end of 2003. This fund may offer potentially high rewards but a note of caution is due, as smaller comp-anies involve higher risks.
According to Standard & Poor's, the Legg Mason US equity fund is ranked first out of 89 funds based on £1,000 invested on a bid-to-bid basis with net income reinvested over one year to April 5, 2004.