By Robert Stock Edinburgh Fund Managers' smaller companies manager Andy Bamford was selected as the ...
By Robert Stock
Edinburgh Fund Managers' smaller companies manager Andy Bamford was selected as the top UK smaller companies fund manager through a survey commissioned by Reuters.
Consultant firm Tempest questioned 700 UK smaller companies and 100 of the largest institutional investors as part of its survey and then ranked fund managers and fund management companies on the basis of their understanding of the individual company and the sector overall.
Bamford was followed by Habib Annous of Merrill Lynch and Andy Brough of Schroders while the M&G investment team and Anthony Bolton at Fidelity were ranked fourth and fifth respectively.
Fidelity came top of the list of fund management houses ahead of Schroders, Merrill Lynch/Mercury, M&G, and Henderson Investors.
Edinburgh Fund Managers was ranked sixth and Jupiter was ranked seventh.
The Reuters 2000 survey also uncovered that UK smaller companies, which represent a total market cap of £95bn, typically feel neglected by asset management houses.
Smaller companies because of their low liquidity and continued high volatility, are less attractive to fund management houses, than large caps
Yet, while UK smaller companies feel unappreciated, fund management houses are beginning to spend more on their small cap research capabilities. Of those surveyed, 54% said they were planning to increase capacity in this area.
Gregor Bamert, vice president of Tempest Consultants, said that although UK smaller companies were beset by difficulties, plans by investment houses to spend more on small cap research capabilities should lead to a narrowing of the gap between what smaller companies believe they are worth and their values as reflected in the markets.
Smaller companies boards feel that there is still a long way to go. Less than 5% of companies polled felt that they were properly researched and understood.
Bamert said management companies remain driven by index-related performance issues, such as adhering to index weightings. This traps smaller companies outside the benchmark indices.
He said the survey had also identified a perceived need for immediacy of execution among asset management houses which is difficult to find in more illiquid smaller company shares.
Some progress is, however, being made, with a gradual shift towards execution in a number of smaller transactions, thereby averaging the sale price, rather than a single transaction.
In order to help smaller cap companies achieve higher market values and greater liquidity, there must be a mixture of listing changes, and more proactive work by the companies themselves in targeting potential investors both institutional and retail, nationally and internationally, he said.
The survey suggested that an important factor in the success of smaller companies, particularly in making them more liquid, was likely to come from the internet which was reducing retail investors' trading costs and increasing the ease with which information is disseminated.
Among the portfolios Bamford manages is Dunedin Smaller Companies investment trust. Over the three years to 7 June its shares have increased by 37.4%.
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