Wealth Manager - the site for professional investment managers

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

Montanaro slashes fees as manager tips quality to regain favour

Montanaro slashes fees as manager tips quality to regain favour

The £198 million Montanaro UK Smaller Companies Investment Trust has joined other closed-ended funds in reducing and simplifying its fee structure.

From 1 April 2014, the trust will lower its management fee from 1% to 0.85% and will also scrap its performance fee.

‘Your board believes that these fee reductions will provide a more competitive and simpler management fee structure,’ said chairman Kathryn Matthews. ‘In addition, this will make fee comparisons with other investment vehicles easier.’

In the six months to 30 September 2013 Montanaro returned 12.8% on a share price basis, although its net asset value gained only 4%, lagging the 12.5% rise in its benchmark Numis Smaller Companies index.

‘We have suffered from the strong rotation into small-cap value, high beta, low quality and cyclical stocks,’ explained manager David Lindley.

However, he noted that over the longer term his fund’s returns were still impressive: it has grown by 49% over the past three years compared with the index’s 40%, 111% against 61% on a five-year view, and 446% against 97% since its inception in March 1995.

A particular drag on recent performance has been Montanaro’s underweight position in consumer stocks, where Lindley commented it is ‘more difficult to discover very high-quality businesses with sustainable competitive advantages that can be held for the long term’. Lindley confirmed he had now reduced this, although he remained underweight in the sector.

Lindley concluded: ‘As we enter the final quarter of 2013, we are seeing small-cap value stocks lose a little steam after a phenomenal run that resulted in an outperformance of  32% relative to growth over the past 16 months. To us, this suggests that we are slowly moving to the next phase of the bull market that would typically be led by growth and quality companies.’

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Navigating geopolitical risk with ETFs

Navigating geopolitical risk with ETFs

ETFGI’s Deborah Fuhr on how investors can use exchange-traded funds to position their portfolio.

Play Sarasin’s Boucher: why I like salmon with chocolate

Sarasin’s Boucher: why I like salmon with chocolate

Henry Boucher, manager of the £129 million Sarasin Food & Agriculture Opportunities fund, explains why he is gobbling up salmon and chocolate stocks.

Play Alibaba hype, the UK slowdown and opportunities in European sovereign bonds

Alibaba hype, the UK slowdown and opportunities in European sovereign bonds

Libby Ashby and leading wealth managers analyse what the Alibaba IPO hype means for Chinese equities, slowing growth of the UK economy and whether there’s anything left to play for in the European sovereign bond market.

Your Business: Cover Star Club

Profile: How David Esfandi is shaping Canaccord Genuity WM

Profile: How David Esfandi is shaping Canaccord Genuity WM

After six months as chief executive of Canaccord Genuity David Esfandi's ambitions are taking shape

Wealth Manager on Twitter