Artemis UK Smaller Companies fund added to the Wealth Shortlist

The fund aims to grow an investment over the long term by investing in the smaller companies listed on the UK stock market. The valuation focused approach means the fund invests differently to many of its peers in the IA UK Smaller Companies sector.

The fund is co-managed by Mark Niznik and Will Tamworth.

Niznik is a seasoned investor with almost 40 years of experience, spending most of this time analysing UK smaller companies. He’s joined Artemis from Standard Life in 2007 and took sole control of the fund in 2011, when John Dodd stepped back. Niznik was joined by Tamworth as co-manager on this fund in 2016. Tamworth joined Artemis in 2015 after previously working as an analyst at Liberium and Citigroup.

We have a positive view of both managers, however given Niznik’s vast experience of investing in higher risk smaller companies, at present, our conviction in this fund is based on his continued involvement.

Niznik and Tamworth look for businesses that are leaders in their markets and have a good degree of visibility of their future earnings. These businesses should have strong balance sheets to support their growth and be driven by capable and experienced management teams. They should also be cash generative, and trade at attractive valuations, offering investors the prospect of good returns in the future. Not every stock will fulfil each of these criteria, so the managers are pragmatic in forming an overall view on how well a company fits the bill.

The managers won’t invest in companies that are pre-revenue because of their focus on cash generation. They are also sceptical about the prospect of investing in small businesses with very ambitious growth projections attached to their future performance expectations. The outcome of this process is a value style bias.

The fund has a value focused investment strategy. Its higher quality approach and focus on valuation means that we expect it not to fall as much as some other funds during down markets, providing some shelter from the worst of market falls. However, this does mean we think the fund could lag its growth focused UK smaller companies peer group in a strongly rising market.

Overall, we think Niznik has the experience, skill and support to deliver good long-term returns to patient investors, although there are no guarantees.

The fund could add diversification to the UK portion of an adventurous global portfolio or could complement a UK focused portfolio orientated towards larger, more established businesses.

We’ve also published a full fund update to go alongside this notification.