Smaller companies fund/trust

homestraight

Hi all
I have been building up a passive global tracker portfolio in a s&s isa over a few years. It won't be touched for 15+years. 
I'd now like to add a satellite fund of smaller companies.  Around 10% of my total investment amount. 
1. I'm thinking that an active fund may be better than passive? Any thoughts on this? 
2. An IT could be a good option? 
3. I'd like something for a long term buy and hold. 
4. I'd like something I only need to review once a year when/if rebalancing.
5. I'd prefer a global fund for diversification if that's something that it's felt a single find manager can handle appropriately otherwise I'd buy two or three regions?

Any suggestions of funds/ trusts you like that I can add to my research? Why do you like them? 
Thanks
Hc

Moe_The_Bartender

I like SSON very much although it’s debatable whether it actually invests in small companies. Smaller than its stablemate, Fundsmith, but still fairly large.

AnotherJoe

I agree with your reasoning and bought an active global fund focussed on smaller companies to replace a smaller companies global index ETF maybe a year ago. Baillie Gifford global discoveries was the one I ended up with. Prior to that I had a passive index fund but that did poorly.  

BG have a very good reputation as fund managers. I'd have preferred an IT but this is an OEIC. I do recall that looking at its constituents and then comments on them, I felt comfortable with them. I can't recall all the reasoning / research that lead to me selecting this from other global smaller companies funds so I'll just have to trust my self of a year ago that I did an OK job picking it from the others.  

As an aside do find it strange it contains Tesla, I'd have preferred it didn't as I also hold that directly and via SMT but if you don't  hold Tesla then this would be a good fund for that reason also. Not quite sure how Tesla counts asa smaller company any more though. Maybe technically because it's not in the S&P, but by market cap it's one of the largest. 

P.s. like you I originally started with the thought that a passive global with satellite smaller companies at say 10-15% is a good mix but looking at long term performance charts I'm starting to think that if anything the reverse is a better idea, and maybe you might decide not to rebalance but let the smaller cos run and take up a larger share. 

Linton

The best place to start research is http://www.trustnet.com.  There you will be able to identify and compare funds, sort into performance order, look at what sectors they favour etc. 

Geography is more important for small companies than large as they tend to be dependant on their local economy both for sales and for people wishing to buy their shares and so provide greater diversification. Don’t just focus on the UK though UK small companies have performed better than large.  This is also true though perhaps  to a lesser extent of other geographies. 

i hold
Liontrust UK Smaller Companies
Baillie Gifford Japanese Smaller Companies
Artemis US Smaller Companies
Threadneedle European Smaller Companies
and am considering Matthews Asian Smaller Companies

However I would not strongly recommend them over others. I am not a great fan of global smaller company funds as I believe good local knowledge and research is helpful. Though unless you have a large portfolio, say > £100k, and want to overweight smaller companies holding a separate fund for each geography may not be justifiable.

Prism

I would say that you are ok with either an IT or a fund at the smaller company level assuming we are talking about an average company size of around £bn+. For smaller than that I would favour an IT over a fund. I do myself hold a microcap fund but it typically holds quite a lot in cash which isn't very efficient. 

I prefer a global fund/trust like BG global discovery or Smithson but if I did want regional funds I would pretty much mirror Linton's list.

[Deleted User]

AnotherJoe said:

I agree with your reasoning and bought an active global fund focussed on smaller companies to replace a smaller companies global index ETF maybe a year ago. Baillie Gifford global discoveries was the one I ended up with. Prior to that I had a passive index fund but that did poorly.  

BG have a very good reputation as fund managers. I'd have preferred an IT but this is an OEIC. 

 

EWI is run by the same management team as BG Global Discoveries (similar to the relationship between SMT and BG Long Term Global Growth).
However similar to SMT, EWI has a remit in unlisted investments as well, that's why the X-Rays look slightly different.

AnotherJoe

Moe_The_Bartender said:

I like SSON very much although it’s debatable whether it actually invests in small companies. Smaller than its stablemate, Fundsmith, but still fairly large.

I also hold SSON and have done since launch. , That would be a good pick also. I think it hasa very different focus and management style to BGGD so holding both might be a reasonable compromise over getting multiple geographic based funds..

AlanP_2

I haven't invested in it yet but the Montanaro European Smaller Companies Trust is on my watchlist.

Prism

AlanP_2 said:

I haven't invested in it yet but the Montanaro European Smaller Companies Trust is on my watchlist.

I looked at that one for a while but went for Montanaro Better World when it launched instead for a bit more flexibility in stock selection. It is mostly smaller companies but a few of the US holdings have more recently crossed into the larger size. For example SolarEdge, currently its largest holding has had a 700% return since over the last 2 years.

Thrugelmir

What's your definition of small?   

JPMorgan Japan Smaller Cos (JPS)

Henderson Smaller Companies (HSL)

Invesco Perpetual UK Smaller Cos (IPU)

Oryx International Growth Fund (OIG)
Herald (HRI)
Montanaro UK Smaller Cos (MTU)
North Atlantic Smaller Cos (NAS)
Augmentum Fintech (AUGM)

msallen

I've been happy with EWI which I've had for a couple of years or so, but my selection was limited due to holding it at x-o where OEICs aren't an option.