Standard Life Investments’ European Smaller Companies Fund (Sicav) is at the top of the Morningstar Offshore Europe Small-Cap Equity Sector.
Since it was launched on 26 September 2007 the fund, managed by Ken Nicholson, has generated a return of 22.8 per cent (institutional share class) versus a sector average of -20.2 per cent. The fund has also achieved top quartile performance over one, two, three and four years.
Nicholson (pictured) has managed the fund since launch, using a distinct small cap proprietary screening tool, whilst collaborating closely with other Standard Life Investments equities teams. He invests in a concentrated portfolio of around 40 stocks of which 28 per cent are currently listed in Sweden and Germany.
According to his experience, within the European smaller company universe there are a number of “hidden champions” which are market leaders in their field, but generally unknown and under-researched by many analysts due to their small market capitalisation.
“When it comes to small caps, you have to kiss a lot of frogs to find a prince among them. But I love the feeling when I come away from a visit to a company and know that we’ve uncovered a real gem,” says Nicholson.
“Europe has a number of world class companies operating in many fields if you look beyond the headline problems of the Euro. Some businesses are market leaders in their sectors, with a large proportion of sales outside Europe, and proven ability to withstand macroeconomic headwinds. They are reporting strong earnings and benefiting from growth in global markets such as Japan, the US and Emerging Markets, and in some cases from a weaker Euro."