We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.

European Smaller Companies - Satellite Investment

I am currently researching European smaller companies funds with a view to investing either in January (annual rebalance) or earlier if the market takes a steep drop. This fund is intended to compliment our core passive/actively managed satellite portfolio. We currently have a gap.

Basic criteria:
- Actively Managed
- OCF < 1%
- Ex UK (we are already invested in a UK smaller companies fund)
- Majority of holdings excluded from major indexes commonly tracked (in order to avoid duplication with our passives).

Threadneedle European Smaller Companies appears a good fit but I am seeking others' thoughts and recommendations. Anyone similarly invested?

TIA.
«1

Comments

  • Linton
    Linton Posts: 17,730 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Hung up my suit!
    I use Threadneedle European Smaller Companies for my growth portfolio and have seen no reason to change,
    For something different if you fancy dividends there is the IT European Assets Trust (EAT) which invests in medium/small growth companies but aims to distribute its gains as a 7% dividend.  Unlike OEIC/UTs ITs do not have to solely pass on dividends received.
  • AlanP_2
    AlanP_2 Posts: 3,293 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Montanaro European Smaller Companies IT is also worth looking at.
  • DairyQueen
    DairyQueen Posts: 1,839 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper
    Thank you. I'll check-out both the suggested alternatives.
  • msallen
    msallen Posts: 1,494 Forumite
    Tenth Anniversary 1,000 Posts Name Dropper
    I'm also looking to buy a small chunk of Euro smaller co's in the near future so this thread is well timed. I had already decided on Montanaro, but there's no harm in my just double checking Threadneedle & EAT before I commit.
    I'm just waiting for a (cash rather than in-specie) transfer from an old company DC scheme to hit my SIPP any day now and rather than just topping up my portfolio in the existing ratio I'm planning to divert some of the part that would have gone to my VWRL core into a basket of Ex-US smaller co's as a bit of a hedge against any deflation in the US tech bubble.
  • DairyQueen
    DairyQueen Posts: 1,839 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper
    Comparing Montanaro and Threadneedle I note that the allocations (geographic and sector) are very different. Montanaro has a large exposure to Sweden and to tech whilst Threadneedle has a more conventional allocation to the large European economies and a large exposure to industrials.

    I quite like Montanero's Scandinavian exposure as it provides extra diversification for my portfolio. @msallen what made you choose Montenaro? 

    I am conflicted. Usually I would choose a single small cap fund for each geographic area but these two have different profiles and I am tempted to invest in both. There doesn't seem to be much duplication except, notably, Sartorius.
  • msallen
    msallen Posts: 1,494 Forumite
    Tenth Anniversary 1,000 Posts Name Dropper
    My main reason was simply that as you have seen, it seemed to have the lowest level of overlap with existing holdings (at least from a relatively cursory scan). I hear what you say about possibly splitting between it and another, but the truth is that the amount I'm looking to allocate to it means that splitting it would mean buying 2 lots of a smaller holding than I would typically bother with in a single fund/IT/ETF.

    If you like the Scandinavian element then Linton's EAT has a touch more (in total, but less in Sweden) although more industrials too.

    I can guarantee that whichever I choose to go with will be the worse performer but I think I'm going to stick with Montanero - as much as anything because I like to try and stick to a decision once I've made it so as to avoid going down the rabbit hole of indecision!
  • Audaxer
    Audaxer Posts: 3,547 Forumite
    Seventh Anniversary 1,000 Posts Name Dropper
    While European Assets Trust has a high yield, the Threadneedle fund and Montanaro IT both have a much higher Total Return over the last 5 years. 
  • Voyager2002
    Voyager2002 Posts: 15,679 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Audaxer said:
    While European Assets Trust has a high yield, the Threadneedle fund and Montanaro IT both have a much higher Total Return over the last 5 years. 

    EAT waited until I had bought it and then tanked: recovery since then has been slow and uncertain. There is no reason to expect this pattern to be repeated.
  • DairyQueen
    DairyQueen Posts: 1,839 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper
    Thanks for the comments.

    I am investing for growth rather than yield so either Threadneedle or Montanaro are good fits.  I have no preference for IT or OEIC. At 1.17%, Montanaro's OCF is a tad steep compared to Threadneedle's 0.88%. Both have performed well relative to their (same) index.  

    This is a small part of our portfolio and diversification is the primary reason for making this kind of investment so I will look closely at the asset allocation to determine which is the best fit. 

    Jury is still out.
  • Audaxer
    Audaxer Posts: 3,547 Forumite
    Seventh Anniversary 1,000 Posts Name Dropper
    Thanks for the comments.

    I am investing for growth rather than yield so either Threadneedle or Montanaro are good fits.  I have no preference for IT or OEIC. At 1.17%, Montanaro's OCF is a tad steep compared to Threadneedle's 0.88%. Both have performed well relative to their (same) index.  

    This is a small part of our portfolio and diversification is the primary reason for making this kind of investment so I will look closely at the asset allocation to determine which is the best fit. 

    Jury is still out.
    Looking at the Trustnet figures, Montanaro annualised returns are 20.6% over 5 years and 12.7% over 10 years. Threadneedle annualised returns are 14% over 5 years, 13% over 10 years. I wonder why Montanaro has done so much better over the last 5 years? Good luck as I would find it difficult as to which one to select.

    Another European fund I like the look of is Baillie Gifford European B Acc with a slightly better 10 year annualised return at 14% but I see that this fund also includes large caps, so probably not the one for you if that is covered elsewhere in your portfolio.
Meet your Ambassadors

Categories

  • All Categories
  • 346.6K Banking & Borrowing
  • 251.4K Reduce Debt & Boost Income
  • 451.4K Spending & Discounts
  • 238.8K Work, Benefits & Business
  • 614.3K Mortgages, Homes & Bills
  • 174.8K Life & Family
  • 252K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16K Discuss & Feedback
  • 15.1K Coronavirus Support Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.