Mark Dampier: Looking to smaller firms to lighten stocks gloom
Saturday 21 January 2012
I have rated Giles Hargreave highly as a stock picker for many years. His Marlborough Special Situations and UK Micro-Cap Growth Funds have been exceptional, and I was therefore excited by the launch of the new Marlborough Multi Cap Income Fund in June last year. The fund, managed by Giles Hargreave and Siddarth Chand Lall, aims for a combination of income and capital growth, blending established dividend payers with exciting smaller company stocks.
Last summer was a difficult time to launch a new fund. The fear of a global macroeconomic slowdown and an intensification of the eurozone debt crisis caused severe volatility, and the market now stands significantly lower than it did when the fund launched. However, it was important to establish a dividend stream as early as possible to provide investors with a reasonable first income payment. The managers therefore invested around two thirds of the money fairly quickly with the remainder following over the next quarter. Given the turbulent conditions, the fund has held up fairly well.
Running an income fund is a slight departure for Mr Hargreave as he tends to look for small, growth-orientated companies. Yet in his research he sees plenty of firms with good dividend records, so applying his expertise to this area should be a natural progression for him. With the majority of the portfolio devoted to small and medium-sized companies it is also genuinely different to most equity income funds, which means it dovetails nicely with some of the better-known funds in the sector, such as Invesco Perpetual High Income, Artemis Income and PSigma Income. They are all larger company orientated, whereas Marlborough Multi Cap Income has only around 10 per cent invested in FTSE 100 companies.
A focus on smaller companies can, of course, increase risk. To help reduce it, the fund has a wide spread of holdings – well over 100. There is no shortage of opportunities. The FTSE 100 contains 91 dividend-paying firms, but cast the net across the whole UK market and there are 717 companies to consider. Mr Hargreave looks for a dividend yield of at least2 per cent and a growing payout, which cuts down the field to around 500.
At 63, Mr Hargreave is the oldest in the team, and there is a good mix of experience and up-and-coming talent. Siddarth Chand Lall, for instance, is 32, but the other four members of the investment team have over 125 years of market experience between them, and all are involved in meeting company management. This is at the heart of their process and they typically meet 25 companies a week between them, often using Mr Hargreave's long-established contacts.
In a recent update with the team, I was intrigued to see how they felt about the current economic situation. While this is primarily a stock-picking fund, it is impossible to ignore the wider picture, especially at the moment. Indeed it is often useful to hear about the insights they receive from company management. Interestingly, I found the team quite bullish. Many companies are trading well, with the environment notably improving in the US. Naturally sentiment could take a turn for the worse given what is going on in the eurozone, but Mr Hargreave is finding many companies at attractive valuations.
The fund will not be as aggressive as the Marlborough Micro-Cap Growth or Special Situations funds, but an estimated yield of more than 4 per cent should be attractive to many investors, especially given that the income should grow over the longer term. In addition, a handful of stocks in the fund are non-dividend payers where the team have identified the potential for dividends to be introduced, potentially providing additional uplift.
The fund has shown a pick-up in performance recently, clawing back some of its initial losses. With so much pessimism in this market any kind of sentiment change is likely to have a big impact on many of the companies the fund owns, so it's definitely one to tuck away for the long term, in my view.
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 hl.co.uk/independent
Independent Partners: See how much you could save by switching credit cards. Compare now
Simon Read: Readers think I should cough up and pay for a tradesman's travelling time
No television licence leads to debt woes after court fines add up
Mark Dampier: Small can be beautiful for those investors who think long term
Tax boost for social investment will unlock £500m
Five ways to make money on the internet
- 1 Cameron's freebie to apartheid South Africa
- 2 Is this the scariest advert ever? Japanese tyre commercial comes with its own disclaimer and health warning
- 3 Sherlock series 3: Benedict Cumberbatch and Martin Freeman provide teasers for the biggest comeback in British television
- 4 A forgotten episode in Russian history leaves links with the Philippines
- 5 People will try to reduce Mandela to a lilting reggae tune about ‘love’. They will fail
- < Previous
- Next >
iJobs Money & Business
£80000 - £100000 per annum + benefits + bonus: Harrington Starr: Project Manag...
£50000 - £60000 per annum + benefits + bonus: Harrington Starr: Business Analy...
£30000 - £40000 per annum + Bonus and Benefits: Harrington Starr: A global Con...
£150 - £250 per day: Cornwallis Elt : iPhone Rollout- Blackberry Enginee...
Day In a Page
A three-bedroom Grade II-listed mews house with vaulted ceilings and roof garden
A spacious Grade II-listed family home with annexe and equestrian facilities among four acres of land in Itchingfield
A four-bedroom home with exposed brick walls and open fires in the picturesque village of Northill
A Grade II-listed property with five bedrooms and unique tower, overlooking Hastings Old Town
A charming five-bedroom detached family home, set within half an acre in Kew
A two-bedroom maisonette set on the top two floors of a period building, close to Kentish Town Tube.
Take advantage of the extra space provided by former stables and outbuildings at this five-bedroom farmhouse.
This three-bedroom Victorian terrace is near to Queen’s Road Peckham station, Nunhead station.
A five-bedroom modern house with terrace, swimming pool, Zen treehouse and large carp pond
An unexpected gem with four bedrooms, remarkable vaulted reception and a galleried study area
A five-bedroom house in one of Lymington's most sought after tree lined avenues, moments from the marinas and sailing clubs
A grand early 19th century B&B close to the historic harbour, with four en suite bedrooms
A four-bedroom, 17th century home with walled gardens, a landscaped terrace, cellar and open fires
A six-bedroom house with five bathrooms and four reception rooms spread over 4,000sq ft of luxury living space
A stunning three double-bedroom apartment with two decked terraces in the exclusive gated community, Bromyard House
A 10-bedroom period, family home amid beautiful surroundings in the centre of the Wentworth Estate in Longcross village
A stylish three-bedroom apartment with two bathrooms and private landscaped garden, moments from Fitzroy Square
A Grade II-listed Elizabethan barn with landscaped gardens, exposed elm beams and four bedrooms, all with lovely views
A six-bedroom family home, dating back to 1280 with four reception rooms, barn, swimming pool and tennis courts in Harwell
A spacious two-bedroom flat, refurbished to a very high standard with private landscaped garden, close to Kentish Town station
An exceptional two-bedroom apartment with balcony and underground parking in the centre of Richmond
A one-bedroom, luxury, duplex apartment in the grand landmark building, Imperial Hall
Run a fabulous boutique shop, live above it in a one-bedroom flat and let a second one-bedroom flat that comes part and parcel
A Grade-II listed, thatched cottage in Hundleby village, with five bedrooms, a coach house and three and a half acres
A spacious two-bedroom flat in the heart of Hoxton Square with wooden floors and roof terrace
A five-bedroom family home with stunning pool and gym complex set among two acres of land
A six-bedroom period house with heated swimming pool and a separate two-bedroom annexe cottage in Townlake, £795,000
A spacious and contemporary two-bedroom flat arranged over three floors, with garden patio close to St George Square, £600,000
A one-bedroom flat in a beautiful Regency building opposite the beach in Kemp Town, £190,000
A two-bedroom flat with London skyline views close to Surrey Quays. £395,000.
A seven-storey tower with three bedrooms and a stunning roof terrace. Guide price: £850,000.
A 16-bedroom country pile with nine reception rooms, four self-contained flats and a 13th century Peel Tower. £850,000.
A classic six-bedroom Victorian Manse house 10 miles from Edinburgh. £495,000.
John Lennon's childhood home in Liverpool to be sold at auction. Guide price: £150,000-£250,000.
A six-bedroom detached period property with secluded gardens, ample parking and a double garage in Rye, £675,000.
A large split-level property with three double-bedrooms and roof terrace, close to Crouch End Broadway, £625,000.
A charming barn conversion in the picturesque Cotswold village of Ilmington with three bedrooms, a detached garage, workshop and beautifully manicured gardens £675,000.
A three-bedroom new build, ground-floor flat with two bathrooms, close to Bermondsey tube, £445,000.
A three-bedroom house in an enviable new development moments from Oxshott High Street, with secluded garden and decked area, £385,000
A two-bedroom split-level flat with stunning south-west facing roof terrace in the popular Brondesbury Conservation Area, £549,950.
A charming 16th century, three-bedroom detached house in Bidborough with picturesque garden