Merian UK Smaller Companies Focus Fund R GBP Inc
UK Smaller Companies
Rated Fund 2017-19. Set apart by team-based approach and investment process
Merian UK Smaller Companies Focus has lost its shine in recent months, but remains a standout performer in this asset group over three and five years.
Nick Williamson became lead manager at the start of 2016 and has attracted a following on account of his conviction behind certain stockpicks proving highly profitable. That led Morningstar to upgrade its analyst rating last year to bronze.
A team-based approach and slightly unusual process set the fund apart. Most smaller companies funds are based on a bottom-up stock picking approach with little regard to the economic backdrop, but the Merian team blends top-down views with fundamental analysis.
The team has a pragmatic and flexible investment approach with no rigid bias toward a ‘value’ or ‘growth’ style. Instead, they look to respond to prevailing economic and market conditions and position the portfolio accordingly.
Williamson says that the team effort helps to generate lots of ideas that can be investigated in greater detail. He looks for two things in particular. The first is stocks that offer structural growth, which means they can grow no matter what the state of the economy. Then he looks for stocks that generate plenty of free cash. He like those because it gives companies the chance either to make acquisitions or to start paying dividends.
The fund is at the manager’s desired capacity, but does not look worryingly huge. At around £350 million, it can still take some meaningful stakes in the smaller companies upon which it focuses.
It has a performance fee of 10% of the relative outperformance of the Numis Smaller Companies index – a price worth paying if Williamson can maintain his stellar long-term record.
Narrative and ratings content all as of 01 January 2019.See all Money Observer rated funds
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Nick has worked at the company since 2008, covering a variety of sectors for the wider UK equities team. Prior to his appointment as manager of the Merian UK Smaller Companies Focus Fund, Nick acted as deputy manager on both the onshore and offshore UK smaller companies funds, since January 2014. Before this he was a sell-side analyst for more than 10 years, with a broad range of analytical responsibilities, most recently at Citigroup.
Data provided by Morningstar.
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