Mark Dampier: Broaden your horizons with a Europe-wide fund

The Analyst

Regular readers of this column will know I have highlighted the stock-picking skills of Harry Nimmo, manager of Standard Life's UK Smaller Companies fund, on a number of occasions. I remain a great fan of Harry's for exposure to the UK, but I have recently discovered the talents of another fund manager in Standard Life's Edinburgh offices. Just over three years ago, Ken Nicholson launched their European Smaller Companies fund. Although it has only been going a relatively short time, I believe it is worth a closer look, even though Standard Life themselves have done relatively little to draw attention to it. That is likely to change, but for now it remains small at around €70 million in size.

Slightly unusually this is a pan-European fund, meaning it invests in the UK as well as in continental Europe. Historically, pan-European funds haven't been terribly successful in capturing investors' attention as people tend to consider the UK and Europe as two entirely separate investment universes, purchasing UK funds for UK exposure and European funds for exposure to companies there. Thus many pan-European funds have been ignored.

Yet it would be wrong to dismiss a fund on this basis, especially one that has performed so well. Indeed, Standard Life European Smaller Companies has kept up with Nimmo's flagship fund since its launch, albeit with the tailwind of a weakening pound against the euro – something that adds an extra dimension of risk to the fund for UK investors.

Presently the fund has around 30 per cent in the UK, roughly in line with the benchmark, and large weightings in Germany and Switzerland. Mr Nicholson, who has been with Standard Life for more than 12 years, is quick to point out that European smaller companies are even less researched than UK ones, allowing a hardworking fund manager huge scope to uncover good value shares and outperform, especially given a concentrated, unconstrained approach such as his. To date, outperform is exactly what he has done, successfully whittling down more than 1,000 companies across 16 countries to just 40 to 50 high-conviction stocks for his portfolio.

Like most Standard Life fund managers, Mr Nicholson has the assistance of an in-house screening tool called the "Matrix". This looks at data on all the stocks and highlights those with strong upward momentum to their earnings revisions, cheap valuations, and where company directors are buying stock. This helps flag up some ideas for him to research in greater depth, though in relation to director buying Mr Nicholson finds it is a less valuable indicator on the continent than in the UK.

As well as attending around 250 company meetings a year he speaks to local brokers who are his ears and eyes on the ground. With such a vast area to cover he feels this network of contacts really helps to add value to the fund.

One of the things I like about Standard Life's approach to UK smaller companies is the consistency they have provided over the years in an area that can be extremely volatile. It looks like Mr Nicholson is repeating this in the field of European smaller companies, a similarly volatile area plagued by fund manager inconsistency. If this continues to be the case, I would suggest investors ignore the pan-European label and consider investing in the fund.

While small companies in Europe are more expensively rated than their blue-chip equivalents, with so many stocks to choose from there will always be forgotten gems to be discovered. Similarly, this fund has been hidden away, but I for one will be following it closely.

Mark Dampier is head of research at Hargreaves Lansdown, the asset manager, financial adviser and stockbroker. For more details about the funds included in this column, visit

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at

Life and Style
Steve Shaw shows Kate how to get wet behind the ears and how to align her neck
healthSteven Shaw - the 'Buddha of Breaststroke' - applies Alexander Technique to the watery sport
A poster by Durham Constabulary
Cameron Jerome
footballCanaries beat Boro to gain promotion to the Premier League
Arts and Entertainment
Performers drink tea at the Glastonbury festival in 2010
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Guru Careers: Software Developer / C# Developer

    £40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

    Neil Pavier: Management Accountant

    £45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

    Sheridan Maine: Commercial Accountant

    £45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

    Laura Norton: Project Accountant

    £50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

    Day In a Page

    Abuse - and the hell that came afterwards

    Abuse - and the hell that follows

    James Rhodes on the extraordinary legal battle to publish his memoir
    Why we need a 'tranquility map' of England, according to campaigners

    It's oh so quiet!

    The case for a 'tranquility map' of England
    'Timeless fashion': It may be a paradox, but the industry loves it

    'Timeless fashion'

    It may be a paradox, but the industry loves it
    If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

    Could have done with Osama bin Laden staying alive?

    Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
    New exhibition celebrates the evolution of swimwear

    Evolution of swimwear

    From bathing dresses in the twenties to modern bikinis
    Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

    Sun, sex and an anthropological study

    One academic’s summer of hell in Magaluf
    From Shakespeare to Rising Damp... to Vicious

    Frances de la Tour's 50-year triumph

    'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
    'That Whitsun, I was late getting away...'

    Ian McMillan on the Whitsun Weddings

    This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
    Kathryn Williams explores the works and influences of Sylvia Plath in a new light

    Songs from the bell jar

    Kathryn Williams explores the works and influences of Sylvia Plath
    How one man's day in high heels showed him that Cannes must change its 'no flats' policy

    One man's day in high heels

    ...showed him that Cannes must change its 'flats' policy
    Is a quiet crusade to reform executive pay bearing fruit?

    Is a quiet crusade to reform executive pay bearing fruit?

    Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
    The King David Hotel gives precious work to Palestinians - unless peace talks are on

    King David Hotel: Palestinians not included

    The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
    More people moving from Australia to New Zealand than in the other direction for first time in 24 years

    End of the Aussie brain drain

    More people moving from Australia to New Zealand than in the other direction for first time in 24 years
    Meditation is touted as a cure for mental instability but can it actually be bad for you?

    Can meditation be bad for you?

    Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
    Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

    Australia's first-ever Eurovision entrant

    Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine