We don’t support this browser anymore.
This means our website may not look and work as you would expect. Read more about browsers and how to update them here.

Skip to main content
  • Register
  • Help
  • Contact us

IFSL Marlborough Special Situations: January 2022 fund update

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.
  • Eustace Santa Barbara and Guy Feld hunt for small and medium-sized UK companies
  • They follow the same investment philosophy and process established by their highly regarded predecessor, Giles Hargreave
  • Over the past year the fund has changed sector from IA UK Smaller Companies to IA UK All Companies
  • This fund is not on the Wealth Shortlist of funds chosen by our analysts for their long-term performance potential

How it fits in a portfolio

IFSL Marlborough Special Situations aims to deliver long-term growth by mainly investing in UK smaller companies. Companies of this size are often overlooked by other investors which can provide an opportunity for the managers to uncover hidden gems.

This fund could complement other investments focused on larger global or UK companies. Additionally, given its focus on companies capable of above average earnings growth - known as growth investing - it may work well alongside a ‘value’ fund, investing in out-of-favour companies with the potential to recover. Smaller companies are higher-risk, and we believe they should only form part of a well-diversified adventurous portfolio.

In August 2021, the fund’s investment policy was changed so only 60% of the fund would need to be invested in ‘smaller companies’ – defined by Marlborough as those smaller than £2.5bn in size. Previously the fund needed to have at least 80% invested in the bottom 10% of the UK stock market by size. As a result, the fund changed sector from IA UK Smaller Companies to IA UK All Companies.


Eustace Santa Barbara has co-managed this fund since September 2014. He joined Marlborough from Close Brothers in 2013 and has over 16 years’ experience in the industry.

Guy Feld was appointed co-manager in January 2021 and has decades’ worth of experience analysing small and medium-sized companies. He is also co-manager of the Marlborough Global Innovation fund, which predominantly invests in small and medium-sized technology companies from both the UK and US.

Collectively, the duo also manage Marlborough Nano-Cap Growth and Marlborough UK Micro-Cap Growth, which focus on even smaller UK companies. Both managers have built up an impressive track record and we believe they leave few stones unturned when it comes to finding small companies with big potential.

They benefit from the support of an experienced team, several of whom also manage other UK focused funds. New additions include James Workman who joined the team in July 2021 from Rathbones where he covered small and medium-sized companies.

Veteran smaller companies investor Giles Hargreave also continues to serve as a sounding board for the managers but is no longer involved in day-to-day management.


Feld and Santa Barbara like companies that are easy to understand and have the potential to grow significantly over the long term. If successful, they will invest more in their favourite investments, or ‘run their winners’. Before any investment is made, they like to meet with company management and assess their quality.

The team also delves into a company’s financial strength. Healthy balance sheets are preferred, and they don’t like excessive levels of debt. They also consider companies that have a great product or service but appear to be ‘under-valued’ due to short-term issues. Maybe they've missed a profit target, or the management team made some unpopular decisions. Either way they must have the potential to turn things around.

With over 2,000 companies to pick from, the managers are spoilt for choice. Around half of the fund’s holdings are listed on the AIM index, a junior market of the London Stock Exchange. They also have a considerable number of investments in the FTSE 250 index of medium-sized companies, many of which they’ve invested in since their infancy. Sector wise, they find most opportunity within industrials and consumer discretionary businesses.

To mitigate the risk involved with smaller companies, the managers run a diversified portfolio of around 150 companies. Historically the managers have invested in over 250 but over recent years they have gradually reduced this number. This means they can invest more in their favourite companies as their conviction grows.

The past year has seen a wave of new companies listing on public markets to fuel their next stage of growth, known as an initial public offering (IPO). The managers have invested in several new companies such as Stelrad, a leading radiator manufacturer, specialist cookware company ProCook and Revolution Beauty, a provider of personal care products. They’ve also reduced their stakes in some of their long-term holdings like digital marketer S4 Capital and biotech company Genus following strong share price growth.

This fund can invest in unquoted companies. The managers only invest in a small number and don’t intend to make any further investments in these. 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.


The culture within the team is one of its strengths. It’s a close-knit one, with everyone fully behind the same investment philosophy. They are employed by 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 firm integrates environmental, social and governance (ESG) factors into their company analysis. They believe this helps to highlight businesses that use more sustainable practices and could thrive over the long term. It could also uncover risks that are less obvious through more traditional company analysis. That said, this is not an ‘exclusions-based’ fund as it can invest in any sector.


The fund has an annual ongoing charge of 0.79% and we think this is good value for access to a talented team of investors. The HL platform fee of up to 0.45% per year also applies.


Since September 2014 when Santa Barbara became co-manager, the fund’s delivered strong growth. The fund was in the IA UK Smaller Companies sector for most of this time, which returned 126.88%* vs 156.15% for the fund. Our analysis suggests this is down to the managers’ ability to invest in companies with strong futures ahead of them, especially those within the consumer discretionary sector. All investments will fall as well as rise in value, so you could get back less than you invest. Past performance is not a guide to the future.

During periods of market stress, the fund’s historically held up better than both the benchmark and the IA sector average. Although, it’s important to remember that smaller companies are less liquid (their shares are harder to trade), which can heighten falls if many investors try to sell at the same time.

Over the past 12 months the fund returned 21.00% vs 22.90% for the IA UK Smaller Companies sector. That said, the managers outperformed their new peer group’s return of 17.13% supported by their bias towards small and medium-sized companies. Although, this is only a short period of time to assess its success vs peers in the IA All Companies sector.

Retailer Watches of Switzerland was one of the fund’s top performers with strong results lifting the outlook for the remainder of the year. With the business expanding into the US, the managers are upbeat about its prospects. Other notable performers included media company Future, veterinary services provider CVS Group and Reach, owner of brands such as the Daily Mirror.

Annual percentage growth
Dec 16 -
Dec 17
Dec 17 -
Dec 18
Dec 18 -
Dec 19
Dec 19 -
Dec 20
Dec 20 -
Dec 21
IFSL Marlborough Special Situations 27.04% -11.54% 19.71% 17.26% 21.00%
IA UK All Companies 14.03% -11.12% 22.42% -6.29% 17.13%
IA UK Smaller Companies 26.74% -11.83% 26.21% 7.26% 22.90%

Past performance isn’t a guide to the future. *Source: Lipper IM to 31/12/2021.

Find out more about Marlborough Special Situations, including charges

Marlborough Special Situations 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.

Want our latest research sent direct to your inbox?

Our expert research team provide regular updates on a wide range of funds.

Sign up today