Coronavirus - we're here to help
From how to access your account online, scam awareness, your wellbeing and our community we're here to help.

Skip to main content
  • Register
  • Help
  • Contact us
  • Log in to HL Account

Marlborough UK Micro-Cap Growth: April 2020 fund update

Jonathon Curtis | Thu 30 April 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.
  • This fund could provide useful diversification and good long-term performance potential
  • Giles Hargreave has one of the best track records in the UK Smaller Companies sector
  • He and co-manager Guy Feld are supported by one of the strongest teams in the sector

How it fits in a portfolio

We think this is an excellent option for adding exposure to some of the smallest companies on the UK stock market. It could work well alongside other funds focused on the larger FTSE 100 and FTSE 250 companies. The fund aims for long-term growth but with higher risks and volatility as it invests at the smaller end of the market, including unquoted stocks.


Giles Hargreave is one of the most successful UK smaller companies fund managers around. He’s got over three decades of experience under his belt, so he’s one of the most experienced too. Fellow manager Guy Feld is also building an impressive record alongside him.

The two managers are backed up by what we think is one of the strongest and well-resourced teams analysing UK smaller companies. They leave few stones unturned in their search for small companies with big potential.

Given how long Hargreave has managed funds, questions around his retirement are natural. He’s given us no indication of plans to step back yet though. He still shows great energy and enthusiasm for what he does. We’ll of course review the situation whenever he does eventually decide to retire, but we’re confident the team has plenty of strong candidates to step up.

Hargreave manages two other funds plus a venture capital trust (VCT), while Feld manages one other fund. All these other portfolios are focused on UK smaller companies and are managed in a similar way, so we think they can comfortably handle these other responsibilities.


The managers believe smaller companies have bigger potential for growth than larger ones. They look for a diverse range of small UK-listed companies they think can grow over the long-term. They expect some will end up several times larger, but there’s also a higher risk of some doing badly or even going bust. They like to ‘run their winners’, staying invested and often investing more if companies perform well, like financial adviser service provider Tatton Asset Management and hazardous waste treatment disposal company Augean.

Hargreave and Feld thoroughly research every company they invest in, and will typically rack up over 750 meetings with company management a year. Not all companies have to be making money now, but they must all have the potential to be highly profitable in the future.

Most of the companies they invest in are part of the FTSE Small Cap or FTSE AIM indices, which aren’t nearly as well covered by other analysts. That gives them a good chance to spot overlooked opportunities or companies deemed too small by others.

Investing in small companies is risky and it can be difficult to invest large amounts in such small businesses. That's why the managers ensure the portfolio’s got plenty of diversification, with over 200 holdings. As a large fund compared to most in the sector, this also helps them to avoid owning too much of too many companies. Until fairly recently there were over 250 in the portfolio, but the managers brought the number down to make it more manageable.

The manager can invest in unquoted companies. They currently only invest in a small number and don’t intend to make any further investments in companies not listed on the stock market. We assess the liquidity of this fund, and receive regular liquidity data from the fund group. We are comfortable that the diverse investor base and large number of holdings means the fund has adequate liquidity for retail investors. However, 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 managers’ investment philosophy. Hargreave is clearly the captain of the ship, but Feld and the rest of the team aren’t afraid to challenge him or each other.

The managers, the team and the fund itself are all part of Canaccord Genuity, a Canada-based financial services company. 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 is available for an annual ongoing fund charge of 0.69%. This is lower than the standard 0.78% charge, as we’ve negotiated a lower rate for HL clients. We think this is excellent value for access to one of the most talented managers and teams in the UK Smaller Companies sector. Our platform charge of up to 0.45% p.a. also applies.


Hargreave and Feld have delivered excellent long-term performance. Since the fund launched in October 2004 they’ve delivered 484.3% returns*, compared with the FTSE Small Cap (excluding investment trusts) index’s 97.9% gain. Our analysis puts this down to their exceptional skill at picking companies that have gone on to grow, and the fund holding up better than the benchmark during market wobbles. Remember past performance doesn’t predict future returns though, and investing in smaller companies can be a bumpy ride as we’ve seen recently.

UK Smaller Companies have particularly suffered amid global stock market volatility. They’re seen as more sensitive to the state of the economy than larger multinational companies, and so many have fallen sharply amid fears of a looming recession. Smaller companies are also less liquid (their shares are harder to trade), which can heighten falls if many investors try to sell at the same time.

The fund fell 29.3% since the beginning of the year, compared with the FTSE Small Cap (ex investment trusts) index’s 32.4% fall. These movements are not unusual for the sector, and are a reminder of why investing in smaller companies should be for the long term.

Marlborough UK Micro-Cap Growth Performance Since Launch

Past performance isn’t a guide to the future. Source: Lipper IM *to 31/03/2020

Annual percentage growth
Mar 15 -
Mar 16
Mar 16 -
Mar 17
Mar 17 -
Mar 18
Mar 18 -
Mar 19
Mar 19 -
Mar 20
Marlborough UK Micro-Cap Growth 18.0% 24.1% 21.1% -3.0% -19.1%
FTSE Small Cap ex investment trusts 5.9% 19.7% 2.2% -3.1% -24.4%

Past performance is not a guide to the future. Source: Lipper IM to 31/03/2020.

Find out more about this fund including charges

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.

You may also be interested in: