Our discovery investment approach appeals to investors looking to diversify away from portfolios with a large-cap bias to improve longer-term risk adjusted returns. Our clients seek access to the growth opportunities of tomorrow - dynamic companies nimble enough to capture structural growth trends quicker than their larger competitors and with strong sustainability credentials.
Smaller and mid-sized companies are covered by fewer analysts and by a small pool of dedicated portfolio managers. MiFID II has also led to an overall reduction in research coverage for small-and mid-cap firms.
Many smaller companies are managed with the same kind of long-term sustainable view as larger companies, but lack the resource to report this, driving less knowledge on their sustainability credentials and subsequently lower ESG ratings. Our proprietary research bridges this knowledge gap.
We can access young firms at the early stages of their growth cycles and often at the cutting edge of innovation, frequently employing the latest technologies in their chosen markets.
Small and mid-caps are usually at different stages of growth cycles. This means we access different fundamental characteristics, incorporating both value and growth. We keep the portfolio nimble and responsive to changes in the market.
We focus on a small number of high-conviction holdings and typically target companies with less than €2bn market cap. We look for:
We believe that:
Companies focused on superior capital allocation outperform on a long-term basis
There is less market efficiency in small and mid-caps as a result of lower analyst coverage
We can identify companies with characteristics that have the conditions for long-term growth
Our selection process is founded on both rigorous fundamental analysis and the identification of firms taking part in the long-term megatrends that will determine the shape of tomorrow’s economy:
Increasing safety, compliance and regulation
Better harnessing technology to improve quality of life
Reducing waste and using the planet's resources more efficiently
We operate an exclusion policy and aim to minimize downside risk by excluding companies with the lowest 20% ESG scores.
Company visits are critical to our approach, and we aim to build mutually beneficial relationships with the firms we invest in through ongoing engagement.
Discover the story of the Austrian catering company DO&CO with Hywel Franklin, our Head of European Equities.
In this discovery story, Hywel Franklin (Head of European Equities) introduces us to innovator Philip Nederman and tells the tale of how he came through the adversity of World War II to create a solution to the problem of dirty air in welding workshops – becoming an industry leader in industrial filtration systems.
Smaller firms can face materially different incentive structures: the greater proportion of owner-managers means their leadership takes ownership, creating clear incentives for delivering inventive products and best-in-class services.
Head of UK Wholesale