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Citywire ratings: small cap stars rise up the ranks

We highlight 10 fund managers moving up the Citywire ratings, including a host of small cap big-hitters.

by Daniel Grote on Nov 17, 2017 at 12:29

James Baker

James Baker has entered the Citywire ratings right at the top after doubling investors’ money in three years at the helm of the MI Chelverton UK Equity Growth fund.

Baker runs the fund with David Taylor, who jumped from an A to a triple-A rating this month. It’s Baker’s first as a named manager, and this month clocked up a three-year track record, having launched in October 2014.

Having returned 99.6% in the three years to the end of October, the fund sits third in a buoyant UK Smaller Companies sector over that period, just beaten into second place by the TB Amati UK Smaller Companies fund and trailing the astonishing success of the Old Mutual UK Smaller Companies fund, up 132.4%.

Chelverton has a track record of running strong UK small and mid-cap funds, with its MI Chelverton UK Equity Income fund, also managed by Taylor, the third best UK equity income fund over 10 years, up 166.3%.

Baker and Taylor’s fund is meanwhile the most straightforward way of accessing the group’s growth strategy, given its other growth mandate, the Chelverton Growth (CWG) investment trust, has been shrinking over the last decade through a series of tender offers. It now stands at just £4.4 million, with 70% of the market cap having been handed back to shareholders over the last 11 years.

Mike Gush

It’s been a rocky ride for investors in Mike Gush’s Baillie Gifford Greater China fund over the last three years, but those who have stayed the course have been rewarded.

Gush’s fund has nearly doubled investors’ money over the last 36 months, with its 98.7% return over that period matched only by the Neuberger Berman China Equity fund over that period. That has seen the manager climb to a triple-A rating, the first in his career, up from AA last month.

As with all China funds, returns have come with an added dose of volatility: the fund lost a quarter of its value amid the ‘Black Monday’ stock market slump in the summer of 2015.

Gush manages the fund with Sophie Earnshaw who is not yet eligible for a rating, having only started as manager last year.

He also manages the broader Baillie Gifford Emerging Markets Growth fund, the top performing open-ended emerging markets fund over the last year, up 28.1%.

Henry Lowson

Henry Lowson has just been handed another fund by his employers Royal London, and given his long-term track record, it’s not hard to see why. Lowson has taken over the Royal London UK Mid Cap Growth fund from Derek Mitchell, who announced his retirement last month.

It’s his second fund at Royal London, to add to the UK Smaller Companies fund he has run since joining the group in September last year.

Lowson doubled investors’ money in just over four years at the helm of his previous fund, AXA Framlington UK Smaller Companies, and has got off to a solid start on the Royal London UK Smaller Companies fund, up 21.4% since he joined. That has helped Lowson scoop an AAA rating this month, up from AA.

He is among a band of UK smaller companies managers to have benefited from the soaring share price of mixer drinks maker Fever-Tree (FEVR), up by more than 1,000% since its flotation three years ago.

Chris St John

Only one of an admittedly small band of UK mid-cap specialist open-ended funds have delivered stronger returns than Chris St John’s AXA Framlington UK Mid Cap fund.

Up 53.7% over the last three years, only Richard WattsOld Mutual Mid Cap fund has performed better, with a 77.9% return, among the 10 funds focused on the UK’s medium-sized companies.

That record has helped St John join Watts on a triple-A rating, up from AA last month.

Mid-caps have lagged both UK blue-chips and small caps since the Brexit vote last year, although they have closed most of the ground lost to the FTSE 100 this year.

And while investors are bearish on UK domestic-focused stocks, a number of UK mid-caps have offered positive earnings surprises. ‘This is providing a helpful backdrop for equity investors when combined with improving growth expectations in several international economies,’ he said.

‘As ever, behind the headlines, thousands of companies with strong balance sheets are growing their profitability and cash flows through skilful allocation of both financial and intellectual capital.’

Philip Rodrigs

Philip RodrigsRiver and Mercantile UK Micro Cap (RMMC) investment trust has been making headlines this year, with the shares up a hefty 58.8% over the last 12 months.

Returns haven’t been quite as spectacular on his open-ended smaller companies fund, but River and Mercantile UK Equity Smaller Companies has been solid, returning 62.7% over three years, just ahead of the average manager.

On the UK Dynamic Equity fund, which Rodrigs has run since the start of the last year, he has delivered a 22.5% return, placing the fund in the upper reaches of the UK All Companies sector. That has helped him gain a Citywire AA rating, up from A last month.

Rodrigs has over a decade’s experience of small cap stock picking, and has proved himself among the best. In just under eight years running the Investec UK Smaller Companies fund before joining River and Mercantile, he returned 193.3%, beaten only by the Schroder UK Dynamic Smaller Companies and Marlborough UK Micro Cap Growth funds over that period.

Charles Plowden

Charles Plowden is another manager whose investment trust has stolen the limelight from his open-ended funds.

Since taking over the running of the Monks (MNKS) investment trust in March 2015, Plowden has revived investment performance, resulting in a rerating of the trust’s shares. Having traded at a discount of nearly 15% to net asset value when he took over, the shares now enjoy a 3.3% premium. That has helped the trust deliver a 100% return to investors over three years, more than double the return of global markets.

Plowden runs the Baillie Gifford Global Alpha Growth fund using a similar strategy, and a three-year return of 71.3% places it towards the top of the Global sector over that time period. The Baillie Gifford International fund, shorn of any UK stocks, is up 69.4% over 36 months.

Those returns have earned Plowden an AA rating, up from A last month, while Spencer Adair, who manages the funds alongside Plowden, also makes the jump from A to AA. The funds’ other manager, Malcolm MacColl, remains at AA this month.

Guy Feld

In our last ratings update we highlighted an associate of legendary UK small cap investor Giles Hargreave, and this month brings another.

Guy Feld works alongside Hargreave on the Marlborough UK Micro-Cap Growth and Nano-Cap Growth funds. It’s been a strong year for the UK Micro Cap fund, up 39.3% over the last 12 months against the backdrop of the smaller companies rally that has taken hold since the initial fallout from the Brexit vote. Over three years the fund is up 72.4%, placing it just outside the top quarter of UK smaller companies fund over that period.

The Nano-Cap fund hasn’t performed as strongly, up 50.9% over three years, although comparisons with other UK smaller companies funds aren’t quite as useful, given the more focused mandate on companies with market capitalisations of less than £100 million. Feld’s combined performance on both these funds earns him an AA rating this month, up from A.

Charlie Awdry

Like Baillie Gifford’s Mike Gush, Charlie Awdry has enjoyed China’s stock market rally more than most.

After losing a quarter of  the Henderson China Opportunities fund's  value in China’s heavy stock market sell-off in the summer of 2015, the fund has been on a tear since, and is now up 79.7% over three years. That’s a return beaten by only a handful of funds, including Gush’s, and has earned Awdry an AA rating, up from A last month.

Helping to power Awdry’s returns have been his high conviction holdings in e-commerce group Alibaba and internet group Tencent, which make up 9.1% and 8.6% of the portfolio respectively. Their shares are up 111% and 96% this year in local currency terms.

Mike Fox

Mike Fox has got off to a solid start at the helm of the Royal London European Growth and European Opportunities funds he took over towards the end of last year.

He has returned just over 20% on both over the last 12 months, placing the funds firmly in the top half of the Europe ex-UK sector.

Fox has made his name as a manager of sustainable funds, having run the Royal London Sustainable Leaders fund since 2006. The fund previously carried the CIS moniker, before Royal London bought the Co-operative Banking Group’s asset management business in 2013.

That fund is up 38.9% over three years, placing it 57th of 227 in the UK All Companies sector. But perhaps more noteworthy is the smoothness of those returns: over that period, the biggest peak-to-trough loss suffered by investors was just 7%, well below the average for the sector.

Fox has gained an AA rating this month, up from A.

James Sym

James Sym’s value bias got its reward with strong returns in the second half of last year that has helped him climb up the performance tables.

Sym has run the Schroder European Alpha Income fund since 2012, and in 2014 was handed the European Alpha Plus fund.

With growth stocks having long led the way, value stocks were resurgent in the second half of last year, given a leg-up by hopes that the election of US president Donald Trump would accelerate growth.

Sym’s European Alpha Income fund is up 61.6% over the last three years, with around a third of those returns having come in the second half of 2016. It’s a similar story for the Alpha Plus fund, up 63.8% over the last three years. That has earned Sym an AA rating, up from A last month.

More about this:

Look up the funds

  • MI Chelverton UK Equity Growth B Acc
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  • TB Amati UK Smaller Companies B Acc
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  • Old Mutual UK Smaller Companies A Acc
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  • Baillie Gifford Greater China
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  • Neuberger Berman China Equity USD A Acc
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  • Baillie Gifford Emerging Markets Growth
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  • Royal London UK Mid-Cap Growth A
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  • Royal London UK Smaller Companies
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  • AXA Framlington UK Smaller Companies R Acc
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  • Old Mutual Mid & Small-Cap R
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  • Investec UK Smaller Companies A Acc Net GBP
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  • River and Mercantile UK Equity Smaller Cos A Inc
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  • River and Mercantile UK Dynamic Equity A
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  • Schroder UK Dynamic Smaller Companies A Acc
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  • Marlborough UK Micro Cap Growth A Acc
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  • Baillie Gifford Global Alpha Growth A Acc
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  • Baillie Gifford International
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  • Marlborough Nano-Cap Growth A Acc
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  • Henderson China Opportunities A Acc
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  • Royal London European Growth Gross A Acc
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  • Royal London European Opportunities A Acc
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  • Royal London Sustainable Leaders Trust A Inc
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  • Schroder European Alpha Plus
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  • Schroder European Alpha Inc A Acc
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  • AXA Framlington UK Mid Cap R Acc
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Look up the shares

  • Fevertree Drinks PLC (FEVR.L)
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Look up the investment trusts

  • Chelverton Growth Trust (Ordinary Share)
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  • River and Mercantile UK Micro (Ordinary Share)
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  • Monks (Ordinary Share)
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Look up the fund managers

  • James Sym
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  • Michael Fox
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  • Charlie Awdry
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  • Giles Hargreave
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  • Guy Feld
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  • Malcolm MacColl
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  • Spencer Adair
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  • Charles Plowden
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  • Philip Rodrigs
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  • Richard Watts
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  • Chris St John
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  • Henry Lowson
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  • Sophie Earnshaw
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  • Mike Gush
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  • David Taylor
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  • James Baker
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