The fund aims to generate growth over the long-term, with a focus on preserving capital. The team invests in a portfolio of 25-30 UK companies listed on AIM - typically those with a market capitalisation of under £150 million at the time of investment.
Your capital is at risk and you may not get back the full amount you invested. Investments in this fund are for the long term and higher risk compared to investments in solely larger, more established companies. Please read full details of the risks here.
What do I need to know before investing?
Where and how is my money invested?
The fund has a proactive private equity approach to investing and seeks to invest in companies that have a market capitalisation of under £150 million at the time of investment, otherwise known as ‘micro-cap’ companies.
We believe the market’s valuation of this sector is inefficient due to a lack of analyst coverage, low trading volumes and often a lack of good corporate governance. Our rigorous bottom-up approach involves proprietary research and extensive due diligence, taking up to 18 months to gain a comprehensive understanding of each company.
The fund's strategy is to unlock value in profitable smaller businesses that have a sustainable competitive advantage and a strong management team. The team follows a value mandate, seeking to invest in businesses which are trading at a discount to our determination of intrinsic value.
The fund often takes large strategic holdings of 3%-25% in these companies to actively influence the company. As significant shareholders, we can actively engage with and influence the company and try to make greater returns for our investors. Our view is that many of these companies are undervalued and can benefit from strategic and operational initiatives such as an improved strategy, corporate governance, operations or balance sheet efficiency.
We reinvest any income generated to help grow the value of your investment.
What's the investment process?
Our typical investment process is laid out below:
- Screening 2,500 companies for investment opportunities.
- Undertake initial due diligence on 200 companies.
- Produce a headline investment paper.
- Conduct fundamental analysis.
- Perform financial modelling.
- Determine valuation analysis.
- Produce full investment paper.
- Invest funds in companies.
- Daily monitoring of 25-30 companies.
What are the risks?
Our investment funds are not suitable for everyone, so we recommend seeking financial advice. This fund may not be appropriate if you plan to withdraw your money within five years. As with all investments, there are risks you should be aware of and comfortable with before you invest.
- The value of your portfolio can go down as well as up so your capital is at risk and there is no guarantee you will get your investment amount back.
- Investing in smaller companies is generally higher risk compared to investing in blue chip companies on a main stock exchange.
- The companies the fund invests in may be significantly more volatile and be less liquid than many other investments.
- The past performance of our fund is not a reliable indicator of future results.
Please note this is only a brief overview of the risks involved with investing in the UK Micro-Cap Growth Fund. Please read full details of all the risks here before investing.
What are the charges?
These charges cover the management, administration, marketing and distribution costs of running the fund. These charges reduce the potential growth of your investment.
B class and C class shares: up to a maximum 5% of the amount of money you invest.
No exit charge.
Annual management charge:
B class shares: 1.00% p.a. based on the value of your investment.
C class shares: 0.75% p.a. based on the value of your investment.
There may be further charges for buying and selling assets for the fund and 'dilution levy' costs associated with entering or exiting the fund, this is to cover costs associated with your transaction. Please see the prospectus in Essential reading for more information.
B class shares: 1.42% (as at 31 January 2019).
C class shares: 1.17% (as at 31 January 2019).
B class shares: none.
C class shares : please see the Key Investors Information Document and prospectus.
For more information about charges please see the fund prospectus - hosted on Maitland Administration Services Ltd.
Who's the team behind the UK Micro-Cap Growth Fund?
The fund is run by Downing Public Equity, which was established in 2010 by award-winning* fund manager Judith MacKenzie. Judith heads up the nine-strong team who manage over £182 million is publicly listed assets (as at 31 March 2019). The investment team have many years’ experience across both private and public equity markets.
Downing Public Equity is a boutique asset management business, drawing on Downing LLP's 25-year venture capital track record.
Our investment committee draws on a significant number of years investment experience to provide risk oversight on new investments and portfolio management.
*Named Small Cap Fund Manager of the Year, Small Cap Awards 2015 and Small Cap Awards 2013 for the Downing UK Micro-Cap Growth Fund.