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TB Amati UK Listed Smaller Companies: March 2023 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.
  • Amati’s co-founder, Dr Paul Jourdan, has been investing in smaller companies for over two decades
  • The managers invest in companies they think can grow faster than their competitors, usually through carving out a niche in a growing market or disruption
  • The fund has performed strongly over the long run, though it’s lagged peers in the IA UK Smaller Companies sector over the last year
  • This fund is on our Wealth Shortlist of funds chosen by our analysts for their long-term performance potential
  • How it fits in a portfolio

    TB Amati UK Smaller Companies aims to achieve long-term growth by investing in the smaller parts of the UK stock market. Companies of this size are often overlooked by analysts, meaning there are plenty of opportunities for investors prepared to scratch below the surface. The team adopts a sensible approach which favours quality businesses and avoids excessive risk. That said, by nature smaller companies are higher risk so this fund could be suited to an adventurous portfolio focused on growth.


    The fund is managed by Dr Paul Jourdan, David Stevenson, Anna Macdonald and Scott McKenzie using a team-based approach which enables them to have eyes in all corners of the market and leave no stone unturned.

    Dr Paul Jourdan co-founded Amati Global Investors in 2010 and was initially the sole manager. His management career began in 1998 and he’s since built up a wealth of experience analysing companies listed both in the UK and around the world. Jourdan is also the chief executive of Amati Global Investors, but we believe he is able to devote enough time to running this fund.

    David Stevenson joined Amati in 2012 and started his career as an accountant before working in various investment roles including corporate finance, private equity, and listed equity. Anna Macdonald was recruited in 2018 as the team continued to expand. Starting her career at Henderson Global Investors (now Janus Henderson), Macdonald has held various fund manager positions throughout her career, mostly with a UK focus.

    The trio became a quartet when Scott McKenzie joined the team in April 2021. He joins from Saracen Fund Managers and brings over two decades of experience managing UK portfolios.

    They’re supported by analyst Dr Gareth Blades, who joined in 2019. His academic and life sciences background means he’s particularly involved in researching healthcare companies. All team members also manage other portfolios at Amati, but they’re all focused on small UK companies too, and the majority of their time is spent on this fund.


    The team’s process centres around detailed company research, and they invest the fund differently to the benchmark. They look for companies that can grow faster than their competitors, usually through carving out a niche in a growing market or disrupting the traditional way of doings things. These tend to be high quality, financially robust companies with talented management teams. They avoid those that are speculative, highly indebted, or lack the edge to compete with larger, better resourced businesses.

    The team invest with the long term in mind. They start by investing 1-2% in each company and, if desired, build this over time to a maximum of 5%. Investments that exceed that size are trimmed. Other factors such as poor governance, a fading outlook or finding a better alternative will also trigger a sale.

    The team carries out quantitative analysis and meet company management to find ideas. One of the most useful sources of investment ideas is their VCT (Venture Capital Trust) portfolio which focuses on even smaller companies in the early stages of growth. Over time they get to know these companies well and often in a lot more detail than the wider market. Once they reach the required size, the managers already have detailed insight into the company, enabling them to assess its suitability for the fund. They will only invest at or after IPO (when a company is listed on a stock market) though.

    All of this analysis whittles a universe of around 1,000 companies to a final portfolio of currently 68 holdings. Although the fund sits in the IA UK Smaller Companies sector, the businesses in the fund generate revenue from around the world. 48% of the revenue generated comes from UK operations, with 14% from Europe, 22% from North America and the rest from around the world.

    Over the last year the managers have made some changes to the fund. One of these was the addition of real estate business Great Portland Estate to the fund. The managers felt that the firm’s potential was going unrecognised and was attractively valued as a result.


    Amati Global Investors, the business behind the fund, specialises in investing in small-to-medium-sized UK-listed companies. We like this dedication to this investing niche, as it means the business is primarily focused on finding the best growth potential within the UK smaller companies’ sector.

    The business is majority-owned by its employees, and all staff are encouraged to invest in it. We view this positively, as it means the managers and staff share a long-term view and it aligns their interests, and that of the business as a whole, with investors.

    ESG integration

    Amati is a more recent signatory to the PRI. The company’s fund managers consider a number of ESG-related issues in their investment process, including issues arising from supply chains, climate change and contamination, unequivocal social negatives such as profiting from addiction or forced labour, board membership, remuneration, conflicts of interest (such as related party transactions), business leadership and culture.

    The company also adopts a Clean Trade approach, which means avoiding companies that support the most oppressive regimes and engaging positively with those that uphold Article 1 of the International Covenants on Civil and Political Rights, particularly in relation to the extraction of natural resources.

    Dr Paul Jourdan, an Amati founder and manager of the Amati UK Smaller Companies fund, is a trustee of the Clean Trade charity, which signals he’s ‘bought in’ to the concept of responsible investing, although he does concede that ESG integration is still a work in progress.

    Amati fund managers and analysts actively engage with the companies they invest in, although their approach to engagement is not as well defined as some of their peers. The team uses all votes, and a quarterly voting record is published on their website, although there is little in the way of rationale.


    The fund is available for an annual ongoing charge of 0.84%. The HL platform fee of up to 0.45% per year also applies.


    The fund’s long-term performance record has been strong with the fund significantly outperforming its benchmark since Paul Jordan became manager of the fund. Our analysis suggests this is the result of strong stock selection. Over the last five years to the end of February 2023 though, it’s returned 13.38%* vs 14.03% for the IA UK Smaller Companies sector average. Remember past performance doesn’t indicate future returns.

    Over the last 12 months, the fund has delivered a return of -14.76%, underperforming its IA UK Smaller Companies peer group average return of -11.70% and the -5.79% return generated by the FTSE Small Cap ex ITs index. We would normally expect the fund to hold up better than the IA UK Smaller Companies sector average when markets are falling  given its focus on quality.

    However, the fund has faced multiple headwinds over this period including a broader style rotation away from growth and rising interest rates compressing smaller company valuations. Our analysis suggests that the fund’s investments in the consumer cyclical sector, where the fortunes of companies are influenced by economic conditions, has been one of the biggest detractors from performance. Investing in smaller companies is higher risk and investors should invest for the long term and be prepared for volatility along the way.

    Annual percentage growth
    Feb 18 -
    Feb 19
    Feb 19 -
    Feb 20
    Feb 20 -
    Feb 21
    Feb 21 -
    Feb 22
    Feb 22 -
    Feb 23
    Amati UK Smaller Companies -0.49% 9.86% 31.49% -7.47% -14.76%
    FTSE Small Cap ex ITs -5.55% 2.60% 21.54% 12.02% -5.79%
    IA UK Smaller Companies -5.41% 8.19% 23.95% 1.79% -11.70%

    Past performance is not a guide to the future. Source: *Lipper IM to 28/02/2023.

    Find out more about TB Amati UK Smaller Companies, including charges

    TB Amati UK Smaller Companies 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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