2% off initial fee on 21-stock portfolio being run by Peter Webb and John McClure
count on its UK Smaller Companies fund run by Peter Webb and John McClure.
The deal on the fund, which usually has a 5% initial fee, will last until the end of September and will not affect the 3% up front commission paid to intermediaries.
UK Smaller Companies only looks at stocks with a market cap of £50m or more, according to McClure.
The fund looks at small, but not fledgling, companies listed on the Extended Hoare Govett Smaller Companies Index. McClure defines the fund's remit as looking for growth from undervalued and out of favour equities. 'We're very focused and don't invest in many companies. For example, at the moment we only have 21 stocks in our portfolio,' he said.
McClure and Webb both work for Unicorn Asset Management, which has the contract to run the Premier portfolio. Unicorn's stock selection is very much based on fundamentals, according to McClure.
He said: 'We play it very safe and don't invest in companies that do not make any money.'
This safety first principle meant that the fund did not get pulled into the technology, media and telecommunications boom. It has also avoided oil exploration and biotech stocks, said McClure. For the Premier fund, stocks are only selected if they hold a dominant position in the market, or if the business has a unique product. Another important factor is whether the management of a company is innovative.
McClure said: 'We look for companies that we can hold for at least three years. That means they have to be really sound businesses and there are only a handful of these, despite a big potential universe. This is why we are so focused.'
Commenting on smaller companies funds that run portfolios of 100 plus holdings, McClure said that he did not believe that there were that many quality companies out there.
Despite this he feels the current outlook for smaller companies is good and said: 'Small caps were out of favour for a long time. It's quite possible to buy now at P/E levels of 11 which is a long way from where blue chips are right now. However, small caps and larger companies are likely to grow at similar rates.'
Webb also runs the Eaglet Investment Trust, which looks at companies with a market cap of less than £50m. Although the selection criteria is slightly different a number of themes are clearly visible in both portfolios.
Distributors have a sector weighting of 23.1% in the UK Smaller Companies fund, and 20.8% in the investment trust. Electronic and electrical equipment companies account for 18.1% of the smaller companies fund portfolio and 14.2% of the investment trust. Both portfolios also have significant holdings in the support services and leisure, entertainment and hotels sectors.
Mike O'Shea, joint managing director at Premier, said: 'At the moment markets are low and we think this is an excellent time to invest. This fund has a strong record and we think a discount at this time should generate a lot of interest.'
The UK Smaller Companies fund has assets under management of £8.6m. Over three months to the 25 July 2001, the fund was ranked fourth in the UK Smaller Companies sector on a bid to bid basis, returning 0.9% growth. Over one year it was ranked third, returning 12% to investors on an offer to bid basis. Over three years it was ranked sixth, recording returns of 57%, again on an offer to bid basis.
Partner Insight: For Blackfinch, the arrival of its IHT portfolio services was a 'natural evolution' in the group's offering and points to an established track record of returning cash to investors.
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