Montanaro UK Income Fund STG Unhedged

UK Equity Income

Rated Fund 2016-20. Offers income for the future

Highly commended in Money Observer's 2015 and 2016 fund awards, Montanaro UK Income was launched in 2006 by Charles Montanaro, whose business, Montanaro Asset Management, specialises in investing in smaller UK and European companies. Consequently, although this fund invests primarily in UK small and medium-sized companies, up to 20% may be invested in Europe where the fund had 9% at the end of 2019. The fund sits in the Investment Association's UK all companies sector but yields 3.4%, with income being paid quarterly. That is expected to rise to 4% in 2020.

Montanaro describes his investment approach as conservative. He looks for well-managed, high-quality companies in growth markets because he believes these are the companies that deliver the highest returns over the long run. This does not mean that he has to compromise on valuation, however - he looks for "quality growth" at a reasonable price.

Investment ideas are generated internally, rather than through stockbrokers, and researched in detail. Desktop research is supplemented with company and site visits to kick the tyres. Montanaro says he is a genuine long-term investor, which keeps turnover and transaction costs low. Once he has identified a suitable company, his ideal holding period is forever. This is one reason why he does not always greet corporate takeovers with as much enthusiasm as others. To show that interests are aligned with investors, he and his investment team have their own money in the fund.

FundCalibre, the fund ratings and research provider, likes this fund because it "adds something extra to an income portfolio". Managing director Darius McDermott says: "It invests mainly in smaller companies with growing dividends ' it's income for the future."

Narrative and ratings content all as of January 2020.

See all Money Observer rated funds
Montanaro UK Income Fund STG Unhedged
Montanaro Asset Management Limited
Open Ended Investment Company
UK All Companies
0.36 %
Risk Rating
3 Year Sharpe
3 Year Alpha
4.1 %
Not Benchmarked
The investment objective of the Fund is to deliver capital growth and income.
Holding %
Marshalls PLC 3.61 %
IntegraFin Holdings PLC 3.42 %
Avast PLC 3.27 %
Big Yellow Group PLC 3.22 %
FDM Group (Holdings) PLC 3.12 %
Pennon Group PLC 3.05 %
LondonMetric Property PLC 3.04 %
XP Power Ltd 2.99 %
St James's Place PLC 2.91 %
4imprint Group PLC 2.87 %
Region %
United Kingdom 86.49 %
Europe - ex Euro 5.72 %
Sector %
Financial Services 18.82 %
Industrials 17.87 %
Technology 17.25 %
Consumer Cyclical 10.10 %
Real Estate 9.01 %
Consumer Defensive 8.14 %
Utilities 7.28 %
Basic materials 5.29 %
Montanaro Asset Management Limited
EC2R 8AR, London, United Kingdom
Legal Structure
Open Ended Investment Company


Charles Montanaro
Joined 01/02/2007

Charles Montanaro graduated with an honours degree in Anthropology from Durham University in 1976. He spent four years in industry before joining Merrill Lynch in 1980 as a private client broker in London. He joined Dean Witter Reynolds in 1984 and Drexel Burnham Lambert in 1987 as a Senior Vice President, where, in both cases, he was their top institutional broker in the UK, joining the high-yield bond department in 1989. In 1990, Charles joined MMG Patricof (now Apax Partners) as a Director of investment banking working with UK smaller companies. In August 1991, he founded Montanaro to specialise in analysing and investing in quoted European smaller companies on behalf of leading institutions. He has since launched and managed several funds totalling over €1 billion and established a strong track record. In addition, he has served on the Boards of two public smaller companies. He was appointed a Director of the Montanaro European Smaller Companies plc on 12 January 2012.

Data provided by Morningstar.

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