Gordon Smith
Partner, Fund Research

What is it?

The Global Smaller Companies Service is a funds-based service that aims to provide access to the long-term growth opportunity in small-cap markets from around the world. It invests primarily in strategies focused on the shares of smaller companies, with a focus outside of the UK.

Why Killik & Co?

As an independently owned investment house we are free to develop investment ideas and strategies internally without any conflicts of interest. The bulk of the investments within this service are likely to be actively managed funds, curated and managed by our independent in-house analysts. Our screening and selection process goes beyond financial analytics, and includes interviews with the Fund Managers as well as ongoing contact with them, ensuring any change to the investment case can be quickly identified and addressed where necessary.

Who is it right for?

This service is right for those looking for long-term growth prospects who are comfortable with higher than average levels of volatility.

The Service

The Global Smaller Companies Service is designed to complement and run alongside more traditional, large-cap-focused direct equity portfolios. The service aims to provide access to small-cap markets from around the world and will be focused on markets outside of the UK. Primary exposures are expected to be to the US, Europe and Japan but the portfolio may also contain exposure to smaller businesses in Asia and other emerging markets where opportunities present themselves.

There is a strong investment case for allocating to smaller companies. The significantly lower investor community coverage of this segment of the market often means that small-cap stocks are under-researched or overlooked, presenting opportunities for the active investor. The ability for a smaller business to grow at faster rates, in addition to the illiquidity premium offered to small-cap shares, has resulted in strong historical evidence of out-performance of larger-cap counterparts over long-term holding periods.

Approaching this on a global scale also provides useful diversification benefits to portfolios; the global investable universe contains several thousand companies from a diverse array of business sectors. However, investment in smaller companies from around the world can in some cases be difficult to access directly for individual investors, especially when aiming to achieve adequate diversification via individual companies; therefore a fund-based approach is taken.

Investment Process

Due to our unbiased approach and our access to investment strategies around the globe, the service looks to leverage the expertise of a select number of specialist Fund Managers with experience investing in the respective markets. The service invests in a range of funds, incorporating some of the world’s leading asset managers, all of which are specially selected and monitored on a continuous basis by our dedicated Fund Research team.

The underlying geographic split within the strategy is determined by anticipated growth rates, market valuations, investor sentiment and technical analysis, with the aim of providing exposure to markets where these factors are providing a tailwind to long-term investment. The service has the ability to invest in both regional and single country investment strategies.

Stock markets with the aforementioned characteristics are likely to offer attractive long-term growth prospects, but may also exhibit higher than average levels of volatility when compared to large-cap markets. The strategy therefore accesses these markets via collective investment funds; investing via funds helps to provide diversification, thereby helping to reduce overall volatility. The strategy allows investment via both open-ended funds (e.g. Unit Trusts) and closed-ended funds (e.g. Investment Trusts). Investment is likely to be made in both actively managed funds as well as passive index tracking funds.

Risks To Be Aware Of

As is the very nature of investing, the value of your investments will rise and fall over time. We devote our time to sourcing the very best investments to meet your objectives, however please do not assume that past performance will repeat itself and you must be comfortable in the knowledge that you may receive less than you originally invested. The majority of the underlying investments within this service will be to equity securities that are not denominated in sterling, leading to fluctuations in the portfolio value due to exchange rate movements.

Closed-ended funds may borrow to invest, thus adding to their overall level of risk, and may trade at a discount to their net asset value for prolonged periods of time.

Find Out More

Contact us on +44 (0) 20 7337 0777 or send us an email at info@killik.com to find out more about our Global Smaller Companies Service or alternatively fill out the form below to download the brochure.

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