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Best and worst UK smaller company funds of 2011

UK smaller companies funds have been a staple holding for growth investors but the sector had a tough time in 2011. We look at the winners and losers.  

 
Best and worst UK smaller company funds of 2011

The UK’s ailing economy and a limited appetite for risk have meant smaller UK companies have taken a beating in recent times.

However, shares in small businesses in the UK rallied following the 2008 crash, making this fund sector the most profitable over the past three years. 

This is a third in a series of reports – so far this week we have looked at the best and worst UK equity funds and the best and worst North America focused funds.

Looking back at 2011

The past 12 months proved to be a tough time for small UK companies. The benchmark Hoare Govett Small Cap index slumped 9.1%, and the average fund in the UK Smaller Companies sector fell 9%.

In the same period 51%, or 30 out of 59 funds, managed to outperform the index's return of 9.1%.

The best-performing fund of 2011 was the CF Octopus UK Micro Cap Growth A Acc fund, with total returns of 3.6%. The fund is overseen by Richard Power and has major holdings Hamworthy (HAMW.L), Advanced Medical Solutions (AMSU.L), Endace (EDA.L) and Hargreaves Services (HASE.L).

Top 10 UK Smaller Companies funds in 2011

Ranking Fund name Total returns over one year
1 CF Octopus UK Micro Cap Growth A Acc 3.60%
2 Marlborough UK Micro Cap Growth 2.20%
3 Liontrust UK Smaller Companies 1.50%
4 Cazenove UK Smaller Companies B Acc 1.30%
5 Artemis UK Smaller Companies R Acc 0.90%
6 AXA Framlington UK Smaller Companies Acc -0.90%
7 Marlborough Special Situations -2.10%
8 Investec UK Smaller Companies A Acc Net -2.20%
9 Baillie Gifford British Smaller Companies A Acc -3.60%
10 CF Amati UK Smaller Companies A Acc -4.40%

Click on the links in the table to find out more about the funds and their managers.

In second place came a Citywire Selection star-pick, the Marlborough UK Micro Cap Growth , overseen by Citywire A-rated manager Giles Hargreave. The fund returned 2.2% with top holdings in CML Microsystems (CML.L), Cupid (CUP.L) and Cove Energy (COVE.L).

Other top performers include Liontrust UK Smaller Companies  run by Citywire A-rated manager Anthony Cross; Cazenove UK Smaller Companies B Acc , a Citywire Selection star pick run by Citywire AAA-rated Paul Marriage; Artemis UK Smaller Companies ; and the AXA Framlington UK Smaller Companies fund.

Taking a longer view…

Over the past three years the benchmark Hoare Govett Small Cap jumped 87.7%, the UK Smaller Companies Sector Average rose 82.4%, and the AIM index added 81.2%.

In the same period 25% funds, or 14 out of 57, beat the benchmark Hoare Govett Small Cap index.   

The clear star performance from 2009 to 2011 comes from Close Asset Management. Two of their funds have accelerated ahead of the index to outperform all other funds. 

In first place comes the Close Special Situations  with total returns of 268.8% over three years. The fund is managed by Citywire AAA-rated manager Deryck Noble-Nesbitt and has key holdings in Tanfield Group (TAN.L), Timeweave (TMW.L) and Fiberweb (FWEB.L).

In second place is the Close Beacon Investment  fund, with total returns of 206% and key holdings in Tanfield Group, Timeweave and Orosur Mining (OMIN.L). The fund is also run by Deryck Noble-Nesbitt.

However, the exceptional performance of these funds should be read in the context of a bounce-back for UK smaller company shares following the market crash in 2008.

Other top-performing funds include Fidelity UK Smaller Companies , overseen by Citywire AAA-rated manager Alex Wright; CF Amati UK Smaller Companies , run by Citywire AA-rated manager Paul Jourdan; Investec UK Smaller Companies , managed by Citywire AAA-rated Philip Rodrigs; and Cazenove UK Smaller Companies makes another appearance.

Top 10 UK Smaller Companies funds in 2009-2011

Ranking Fund name Total returns over three years
1 Close Special Situations 268.80%
2 Close Beacon Investment 206.30%
3 Fidelity UK Smaller Companies A Acc 150.20%
4 CF Amati UK Smaller Companies A Acc 136.00%
5 Investec UK Smaller Companies A Acc Net 135.20%
6 Cazenove UK Smaller Companies B Acc 132.20%
7 Marlborough UK Micro Cap Growth 128.80%
8 Marlborough Special Situations 111.70%
9 Scot Wid HIFML UK SmCos Alpha1 102.20%
10 Schroder Institutional UK Smaller Companies I Inc 101.80%

Click on the links in the table to find out more about the funds and their managers.

Struggling at the bottom

Struggling at the bottom of the performance tables is Phoenix Group’s PFS Downing Active Management  fund with total returns of 1.2% over the past three years. The fund is run by Judith Mackenzie with top holdings in cash making up 18% of the fund, followed by Tracsis (TRCS.L) and Idox (IDOX.L).

Bottom 10 UK Smaller Companies funds in 2009-2011

Ranking Fund name Total returns over three years
1 PFS Downing Active Management A Acc 1.20%
2 MFM Techinvest Special Situations 22.90%
3 UBS UK Smaller Companies A 36.70%
4 Newton UK Smaller Companies GBP Inc 44.50%
5 Scot Wid HIFML Sm Cos 1 46.10%
6 Halifax Smaller Companies C 47.10%
7 SF t1ps Smaller Companies Growth 52.40%
8 Aberforth UK Small Companies 54.60%
9 Invesco Perpetual UK Small Cos Eq Acc 55.50%
10 HSBC UK Smaller Companies Inc 58.10%

Click on the links in the table to find out more about the funds and their managers.

MFM Techinvest Special Situations  follows closely behind. The fund is run by Conor McCarthy and Darren Freemantle with top holdings in technology companies like Blinkx (BLNX.L), and Idox (IDOX.L).

Some of the other worst-performing funds include UBS UK Smaller Companies ; Newton UK Smaller Companies GBP ; Scot Wid HIFML Sm Cos ; and the Halifax Smaller Companies fund.

Using Citywire data

All ratings are carried out according to data on the Citywire Money website.

For this analysis, we have looked at the 57 unit trusts (or open-ended investment companies as some of them are called) operating in the UK smaller companies sector. This excludes investment trusts and exchange traded funds and unit trusts investing in smaller company shares.

To do this we have looked at the one- and three-year returns of UK smaller companies funds available on our website. This performance data comes from a specialist provider called Lipper, which is part of the Thomson Reuters group. You can see the figures for yourself by following the links in this article. 

Our exclusive fund manager ratings are based on our analysis of the Lipper fund performance data. You can find out more about how we rate fund managers here

2 comments so far. Why not have your say?

abbass hassan

Jan 26, 2012 at 08:44

Any one know top 10 small share's of last month please and why. Thanks

report this

Franco

Jan 26, 2012 at 23:19

Mr Barr,

Thank you for your efforts but we are not looking for the best funds of the past 3 years, we are looking for the best funds of the next 3 years.

report this

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Look up the funds

  • CF Octopus UK Micro Cap Growth A Acc
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  • Marlborough UK Micro Cap Growth
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  • Liontrust UK Smaller Companies
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  • Cazenove UK Smaller Companies B Acc
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  • Artemis UK Smaller Companies R Acc
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  • AXA Framlington UK Smaller Companies Acc
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  • Marlborough Special Situations
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  • Investec UK Smaller Companies A Acc Net
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  • Baillie Gifford British Smaller Companies A Acc
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  • CF Amati UK Smaller Companies A Acc
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  • Close Special Situations
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  • Close Beacon Investment
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  • Fidelity UK Smaller Companies A Acc
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  • CF Amati UK Smaller Companies A Acc
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  • Investec UK Smaller Companies A Acc Net
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  • Cazenove UK Smaller Companies B Acc
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  • Marlborough UK Micro Cap Growth
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  • Marlborough Special Situations
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  • Scot Wid HIFML UK SmCos Alpha1
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  • Schroder Institutional UK Smaller Companies I Inc
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  • PFS Downing Active Management A Acc
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  • MFM Techinvest Special Situations
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  • UBS UK Smaller Companies A
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  • Newton UK Smaller Companies GBP Inc
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  • Scot Wid HIFML Sm Cos 1
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  • Halifax Smaller Companies C
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  • SF t1ps Smaller Companies Growth
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  • Aberforth UK Small Companies
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  • Invesco Perpetual UK Small Cos Eq Acc
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  • HSBC UK Smaller Companies Inc
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Look up the shares

  • Hamworthy PLC (HAMW.L)
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  • Advanced Medical Solutions Group PLC (AMSU.L)
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  • Endace Ltd (EDA.L)
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  • Hargreaves Services PLC (HASE.L)
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  • CML Microsystems Plc (CML.L)
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  • Cupid PLC (CUP.L)
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  • Cove Energy PLC (COVE.L)
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  • Tanfield Group PLC (TAN.L)
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  • Timeweave PLC (TMW.L)
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  • Fiberweb PLC (FWEB.L)
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  • Orosur Mining Inc (OMIN.L)
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  • Tracsis PLC (TRCS.L)
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  • Idox plc (IDOX.L)
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  • Blinkx PLC (BLNX.L)
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Look up the fund managers

  • Paul Marriage
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  • Richard Power
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  • Giles Hargreave
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  • Anthony Cross
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  • Deryck Noble-Nesbitt
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  • Alex Wright
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  • Paul Jourdan
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  • Philip Rodrigs
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  • Judith Mackenzie
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  • Rupert Yeoward
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  • Conor McCarthy
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  • Darren Freemantle
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