Artemis UK Smaller Companies: October 2026 fund update

We have a positive view of managers, Mark Niznik and Will Tamworth, who are both experienced UK Smaller Companies investors

The managers are part of a broader UK equities team at Artemis that we rate highly

The fund’s focus on higher quality names trading at an appealing valuation could make it less exposed to a market sell-off than some other funds.

The fund features on our Wealth Shortlist of funds chosen by our analysts for their long-term performance potential.

How it fits in a portfolio

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

Smaller companies can have more growth potential than larger ones, since doubling your profits from £30 million is easier than doubling them from £3bn. Companies of this size are also often overlooked by analysts, meaning there can be hidden value for investors prepared to do the legwork. However, small businesses often lack the organisational maturity of larger businesses, with fewer clients and a less diverse product line up, making them more volatile and higher risk.

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

Manager

The fund is co-managed by Mark Niznik and Will Tamworth, supported by experienced and recently appointed investment analyst Anna Pugh.

Niznik began his career at Legal & General in 1985, with subsequent spells at Perpetual and Standard Life working on small- and mid-cap products. In 2007, he joined Artemis and became co-manager of the UK Smaller Companies fund alongside seasoned investor and Artemis co-founder John Dodd. In January 2011, Dodd stepped back and Niznik became sole manager of the UK Smaller Companies fund.

Tamworth began his career at Citigroup as an equity research analyst in the UK small and mid-cap team before moving to cover support services at specialist UK small- and mid-cap broker Liberum. He joined Artemis in 2015 and in March 2016 became co-manager of the UK Smaller Companies fund.

Anna Pugh joined the team in 2026 as a dedicated analyst on the UK Smaller Companies strategy. She previously spent eight years at River Global working on their small and micro-cap strategies. We expect her role in the management of the fund to grow over time.

We have a positive view of the team. They are highly capable and experienced in investing in this part of the market, and we believe their workload in managing this fund and an investment trust is manageable.

Process

The managers aim to back fundamentally high-quality, but underappreciated, businesses. Unlike many value-oriented funds, the team don’t look for short term catalysts that could spark a recovery, but are willing to be long term owners of the businesses they invest in.

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 with little or no debt, 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 and are sceptical of small businesses where the valuation depends on very ambitious growth projections. This gives the fund a modest value style bias when compared to many smaller company managers.

The fund targets a portfolio of 60-90 stocks, with individual company positions generally not exceeding 3% of the fund. Although the managers don’t actively manage the fund’s sector exposures relative to the wider market, they do proactively look to manage and mitigate overlapping risks within the portfolio – with multiple holdings that provide exposure to the UK housing market for example.

Recent additions to the portfolio include specialist electronic component manufacturer discoverIE Group, which was trading at a low valuation amid a cyclical recovery and destocking cycle. Since then the company has issued a number of modest upgrades, with the shares responding positively. That has taken the company to a top ten position in the fund. Recent sales include Telecom Plus, which the fund sold after a period of repeated poor results in an increasingly competitive environment, and JTC which was acquired by private equity group Permira in September.

Culture

Artemis seeks to provide an attractive environment for fund managers, allowing them the freedom to run money how they see fit without imposing a house view. It aims to foster a collegiate atmosphere, with managers supporting and challenging each other. We think this structure is a good thing for investors, as the managers and the firm are focused on the long term and can run funds without distractions from short-term shareholder demands.

The managers of the fund are partners in the business. They are rewarded from the profits of the business, based on their long-term fund performance and payment of the profit share can be deferred over several years.

ESG Integration

Investment teams across Artemis are encouraged to think for themselves and invest according to their own style, so approaches to ESG integration across the firm vary. Recent meetings with the Artemis teams we back on the Wealth Shortlist suggest ESG is an important factor. However, this is not an explicitly ESG focussed fund.

Artemis has a firm-wide policy to support the aims of international conventions on cluster munitions and antipersonnel mines and therefore the firm will not knowingly invest in companies which produce these weapons. The firm also avoids companies involved in biological/ chemical weapons, blinding laser weapons, incendiary weapons, weapons that produce non detectable fragments, and depleted uranium, as well as companies with a tie to nuclear weapons in countries not included in the Treaty on the Non-Proliferation of Nuclear Weapons. Companies that grow or sell cannabis are also avoided.

Artemis votes on all its holdings, unless restricted from doing so, and fund managers lead engagement with firms to develop their understanding, raise issues with management and monitor subsequent developments. The firm provides engagement case studies, and other information about its engagement and voting efforts, in an annual Stewardship report. Artemis also provides a monthly voting summary which includes rationales for votes against management and abstentions. Stewardship activity is carried out in line with the firm’s comprehensive Stewardship policy

Cost

This fund is available at an annual ongoing fund charge of 0.86%, but with a 0.09% saving it’s available to HL clients for 0.77%. The fund discount is achieved through a loyalty bonus, which could be subject to tax if held outside of an ISA or SIPP.

Our platform charge of up to 0.35% per year also applies, except in the HL Junior ISA where no platform charge applies. Both a buy and sell instruction will be subject to HL dealing charges.

Find out more about our charges

Performance

Since Niznik became lead manager of the fund in January 2011, the fund has delivered returns of 301.6%* compared with 215.7% for the IA UK Smaller Companies peer group average. Past performance isn't a guide to the future.

The fund’s more value focused investment strategy is unusual in the UK smaller companies sector and means it will perform differently to many peers. The emphasis on quality could be an advantage during down markets, providing some shelter from the worst of market falls. However, this does mean the fund may lag in a strongly rising market.

Over the last 12 months, the fund has delivered returns of 8.5%, compared with a return of 9.6% for the UK Smaller Companies sector average. The fund has struggled with some poor performing individual investments, notably identity verification provider GB Group and broadband provider Telecom Plus, partially offset by a number of acquisitions from within the portfolio including Harworth and JTC.

As of the end of September, the fund yields 2.02%. Income isn’t guaranteed, and yields aren’t a reliable indicator of future income.

Investments fall as well as rise in value, so investors could get back less than they invest. Investing in smaller companies is higher risk and investors should invest for the long term and be prepared for volatility along the way.