Merrills targets small caps

Richard Plackett is looking to increase the focus of the £43m Merrill Lynch UK Smaller Companies fund over the coming months. The fund currently holds about 120 stocks, which Plackett will reduce to 100. However, given the existing lack of liquidity in the small cap market, selling out of old holdings and buying into new ones might take several months, he noted. Plackett is cautiously optimistic on the asset class, which is trading on a significant discount to the FTSE 100. The benchmark Hoare Govett Smaller Companies Index is currently trading on a P/E of 12 times, against 15 times ...