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Marlborough Multi-Cap Income: June 2020 fund update

Emma Wall | Fri 12 June 2020

Investments can go down as well as up so there is always a danger that you could get back less than you invest. Nothing here is personalised advice, if unsure you should seek advice.
  • Manager Siddarth Chand Lall invests differently from most other equity income funds
  • The fund has exposure to small and mid-sized companies offering potential for growth
  • The wider team has a great track record investing in smaller companies
  • This fund is on our Wealth 50 list of funds chosen by our analysts for their long-term potential

How it fits in a portfolio

This fund mainly invests in dividend-paying small and medium-sized companies, instead of the larger firms most income funds target. These companies offer greater growth potential because they’re at an earlier stage of their development, although this makes them higher risk. Because of the differentiated way this fund invests, it could sit well alongside other UK equity income funds in a portfolio to add diversification, or add equity exposure to an income-focused portfolio.


Siddarth Chand Lall has managed the Marlborough Multi-Cap Income fund since launch in July 2011, and has been working at Marlborough since 2007. Before joining Marlborough he was an analyst specialising in UK and European smaller companies.

Chand Lall is supported by some of the UK’s best smaller companies’ fund managers, including industry veteran Giles Hargreave, who has more than two decades experience investing in small caps. Hargreave has recently announced plans to scale down his fund management duties, but we are pleased he has no immediate plans to retire, and he’ll still play a part in offering research and challenge to all fund managers at the firm.

There are additionally three named analysts on the Multi-Cap Income fund.


The fund sits in the IA Equity Income sector, but is invested differently to peers thanks to its exposure to small and mid-sized companies, and aims to provide income and capital growth. The process hinges on the manager’s philosophy that smaller companies tend to outperform their larger counterparts over time – although this is not guaranteed, and smaller companies carry greater risk.

By conducting their own research, the investment team believes it can uncover small and mid-sized companies where the market has not recognised their true worth. The manager looks to identify stocks that are good quality, but at a reasonable price, and likes companies that either pay a steady dividend now, or will increase their pay-out over time. He also incorporates some macro-economic thinking in his stock selection, considering the market and economic outlook before investing.

Stock ideas are generated from an investable universe of 700 income paying stocks. Following analysis of financial statements, models and data, and meeting companies’ management, there is an investment debate to stress test stock ideas. Chand Lall then approves ideas and sets the weight in the fund. He prefers to hold a large number of stocks, which means each company usually makes up no more than 3% of the portfolio.

The number of stocks in the fund has changed from 148 to 125 since the beginning of 2018 and there has also been an increase in allocation to large cap stocks over this time as the fund manager has looked to take advantage of opportunities across the market cap range.

Typically the fund manager likes to own no more than 5% of a company, to ensure there is a sufficient market in the shares, helping to mitigate some of the risks associated with investing in smaller companies.

This fund does not currently invest in any unquoted companies, although it has done in the past. Investors should be aware that investment in unquoted companies is higher risk and they can be considerably less liquid than those traded on established stock exchanges.

Recently, concerns about the impact of coronavirus have led a number of UK firms to cut their dividend. Chand Lall says this period of uncertainty has challenged investors’ assumptions about what makes a defensive stock, as even companies with cash on the books have cut pay-outs. The significantly reduced oil price has put additional pressure on mining companies, and led Royal Dutch Shell to cut its dividend for the first time in its history. Chand Lall owns BP, which continues to pay a dividend, and sold Shell before the cut.

He says some sectors have benefited through coronavirus however, such as technology, online media and gaming, and communication services, as these sectors see increased demand and continue to pay dividends. The fund owns Bloomsbury Publishing and 888 Holdings. The uncertainty has also led to an increase in the gold price, which in turn has boosted the outlook for gold miners.

Part or all of the annual charge is taken from capital rather than income generated, increasing the potential for your investment’s capital value to be eroded.


Chand Lall and his colleagues work for Hargreave Hale, an asset manager which was bought by Canaccord Genuity, a Canada-based financial services company in 2017. Canaccord provides them with plenty of resources while allowing the managers the freedom to run their funds the way they see fit. The way Canaccord rewards them ensures they’re focused on the long term, which is a good thing for investors.

Marlborough Fund Managers, from where the fund gets its name, is a separate company. It provides the fund’s marketing and distribution, and doesn’t get involved in the investment side of things. It’s an uncommon set up, but one that’s been in place for many years, and seems to work well and suit everyone involved.


The fund has an annual ongoing charge of 0.78%, but through Hargreaves Lansdown you can secure an ongoing saving of 0.19%. This means you’ll pay a net ongoing charge of 0.59%. The fund discount is achieved through a loyalty bonus, which could be subject to tax if held outside of an ISA or SIPP. An additional platform charge of up to 0.45% per year applies.


Chand Lall's managed the fund since it launched in July 2011. In that time he's delivered attractive returns*, outperforming the FTSE All Share benchmark – although past performance is not a guide to the future.

As with any fund investing in smaller companies however, returns have been volatile and there have been some big ups and downs in performance. Returns were very strong in the four years to 2016, but then lagged the benchmark following the vote to leave the European Union, thanks to the bias towards domestically focused small and mid-cap stocks.

The fund then outperformed again in 2017, before suffering in the fourth quarter when global stock markets fell.

More recently, 2019 was a strong year, with the fund outperforming the benchmark – but the coronavirus has hurt year to date performance, thanks to concerns about economic growth and dividend cuts. Investors should expect continued volatility.

Annual percentage growth
May 15 -
May 16
May 16 -
May 17
May 17 -
May 18
May 18 -
May 19
May 19 -
May 20
Marlborough Multi-Cap Income -0.7% 12.4% 5.2% -2.4% -12.4%
FTSE All-Share -6.3% 24.5% 6.5% -3.2% -11.2%

Past performance is not a guide to the future. Source: Lipper IM *to 31/05/2020

More on Marlborough Multi-Cap Income, including charges

Marlborough Multi-Cap Income Key Investor Information

Important information - Please remember the value of investments, and any income from them, can fall as well as rise so you could get back less than you invest. This article is provided to help you make your own investment decisions, it is not advice. If you are unsure of the suitability of an investment for your circumstances please seek advice. No news or research item is a personal recommendation to deal.

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