Advisers will stick with AIM and smaller company funds despite current global market uncertainty, research suggests.
A study conducted by Noble Fund Managers found more than a third of IFAs expect improved performance from the asset class in 2008.
However, 40% of the 1,100 advisers surveyed said they were unsure about whether the market would improve or worsen, while 28% said they did not expect any progress.
Paul Jourdan head of quoted investments at Noble and manager of its AIM Venture Capital Trust, says: “IFA opinion is divided over the outlook for smaller companies, which is understandable considering the current nervousness about stock markets in general.
“Investing in smaller companies pays dividends in the long run if the manager knows the investee companies inside out, but in the near term the market is unpredictable.
“There are well-publicised macro risks to contend with over the next 12 months, but the market has already fallen sharply to reflect this.”
Fund managers will need to step up their face-to-face visits with company management to exceed benchmark returns in 2008, Jourdan adds.
“With such a massive universe of companies in which to invest, developing a deep knowledge and understanding of prospective companies is vital.
“We follow an active process utilising extensive smaller companies experience and commercial contacts to root out stocks with a strong business franchise and the potential for above-average earnings growth.”
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