View the article online at http://citywire.co.uk/money/article/a592617
Is this the best fund you’ve never heard of?
It has no website and does no marketing. Yet Simon Knott's UK smaller companies fund has outperformed its peers.
‘We don’t market ourselves. We don’t market the fund. We rely on my performance,’ says fund manager Simon Knott.
In fact at a time when the major asset management companies are scrambling to drench every corner of the World Wide Web with their branding, not to mention billboards around the country, the nearly 50-year-old Discretionary Unit fund has no website.
But Discretionary's UK smaller companies fund is beating most of its better-known competitors: in the past three years the fund has returned 130% against a 47% return on the FTSE Small Cap index.
The performance of the £29 million fund has helped Knott to a Citywire AAA status. This is the first time in almost seven years that Knott, who has managed the fund for 22 years, has managed this highest of Citywire ratings.
With little online presence, who invests in the fund? ‘We have a wide range of investors from IFAs and individuals to people who’ve inherited their units from parents or even from grandparents,’ says Knott.
Knott explains the fund’s resilience: ‘It has been a good period for UK smaller companies. I was in the right place coming out of the banking crisis and being in a lot of good companies that were over-sold in the banking crisis.’
Thereafter Knott attributes the fund’s performance to individual companies, of which he sticks to about 30 in what he calls a ‘tight portfolio’: if you’re picking good companies, why not invest large amounts of money in them, he says.
Knott describes himself as a ‘deep value investor’ who engages in ‘completely bottom up stock picking’ and holds onto them as long as they continue to perform. He dismisses questions about the difficult economic backdrop provided by the unpredictable eurozone crisis.
‘Tough markets are in a sense good for me because I’m able to find value.’
‘At end of the day it’s not about the macroeconomy [but rather] proper macroeconomic analysis of companies that I’m invested in. If you’re buying good smaller companies you can normally buck macroeconomic trends.’
Knott also runs a UK smaller companies investment trust, the Rights & Issues Investment Trust , which is also a top performer among its competitors. This forms the largest holding in the Discretionary Unit fund, some 8% of it.
The second biggest holding after the investment trust is Brammer (BRAM.L), the supplier of industrial maintenance, repair and overhaul products. This makes up 7% of the fund.
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