Marlborough Multi Cap Income: May 2026 fund update

• The fund invests in small and medium-sized companies, which offers potential for growth and diversification in income

• Siddarth Chand Lall has managed the fund since its launch in 2011

• Since launch, the fund’s return has lagged the FTSE All Share index

• 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

The Marlborough Multi Cap Income fund mainly invests in dividend-paying small and medium-sized companies, instead of the larger companies most UK equity income funds target.

These companies can offer greater growth potential because they’re at an earlier stage of their development, although this also makes them higher risk and can increase volatility. As this fund invests differently, it could add diversification to UK equity income funds focused on larger companies or add equity exposure to a broader income portfolio.

Manager

Siddarth Chand Lall has managed the Marlborough Multi Cap Income fund since launch in July 2011. He joined the UK Equities team in 2007 to work on the Marlborough funds. Before joining he was an analyst specialising in UK and European smaller companies at Dalton Strategic Partnerships.

The manager works closely with income specialist Will Rosier and has the support of the broader small cap team.

Process

The fund aims to provide income and growth by investing in UK shares. It’s part of the IA UK Equity Income sector but invests differently from many peers due to its exposure to small and medium-sized companies. This approach follows the manager’s philosophy that smaller companies tend to outperform their larger counterparts over time, although this is not guaranteed.

By carrying out research, the investment team believes it can uncover small and medium-sized companies where the market hasn’t recognised their true worth or growth potential. That said, the fund invests in some larger, more established companies too. Chand Lall looks for good quality companies, whose shares are reasonably priced and either pay a steady dividend now or are expected to increase their dividend over time.

Chand Lall prefers to invest in a larger number of companies than some peers. As at the end of April there were 95 companies in the fund. This reduces the risk of any one company’s failure impacting the fund’s returns or the income received.

The biggest sector allocations in the fund are to financials, industrials and consumer discretionary companies with 32.1%, 19.1% and 17.2% currently invested in these sectors respectively.

Over the last 12 months new additions to the fund include mining companies Endeavour Mining and Valterra Platinum, as well as French liquified gas transport company Gaztransport et Technigaz also known as GTT. On the other hand, the manager sold utility company Telecom Plus, self-storage company Big Yellow and business park owner Sirius Real Estate.

Culture

Fund managers 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, which seems to work well and suit everyone involved.

ESG Integration

Marlborough’s focus on smaller companies means integrating Environmental, Social, Governance (ESG) is more challenging, given a lack of external research coverage and quality ESG data. However, the firm is increasingly considering ESG factors, with a focus on governance.

Chand Lall has suggested he’d be prepared to sell a company if ESG concerns couldn’t be resolved. Even so, we believe Marlborough’s ESG integration is at an early stage, and engagement activity is not as systematic as some peers.

The manager integrates some ESG analysis into the stock selection process. Chand Lall believes he can use his expertise of investing in smaller companies to engage with boards of directors, hold companies to account and support improvement. This isn’t an ESG fund though.

Cost

The fund has an annual ongoing charge of 0.80%, but through Hargreaves Lansdown you can secure an ongoing saving of 0.19%. This means you’ll pay a net ongoing charge of 0.61%. Our platform charge of up to 0.35% per year also applies, except in the HL Junior ISA, where no platform charge applies.

We recently made some changes to the amount clients pay to invest with us. Find out more about these changes

Part or all of the annual charge is taken from capital rather than income generated, this increases the income paid but reduces the potential for capital growth.

Performance

Since the fund launched in July 2011, Chand Lall has delivered a higher level of income than the fund’s benchmark, the FTSE All-Share, in each year to date. At the time of writing, the fund has a historical yield of 4.56%, compared with the FTSE All Share yield of 3.13%. Income isn’t guaranteed, and yields aren’t a reliable indicator of future income.

In terms of overall growth, Chand Lall has delivered returns of 136.46%*. This is behind the 212.52% return from the FTSE All Share index, and the 187.60% return from the IA UK Equity Income sector average over the same period. Past performance isn’t a guide to future returns.

UK smaller companies have lagged larger, more established companies in recent years, which has impacted all funds investing in this part of the market, including this one. Larger companies have been supported by greater international revenues, particularly from markets such as the United States. Some large oil and gas companies have also benefited from higher commodity prices, while higher interest rates have helped larger banks.

Looking at the past year to the end of April 2026, the fund delivered a return of 10.37%, underperforming the FTSE All Share index which rose by 25.21% and the IA UK Equity Income sector average return of 18.20%.

An investment in private equity company 3i was one of the key detractors from performance. 3i invests in discount retailer Action, which has had weaker sales following geopolitical uncertainty in the Middle East. Other detractors include packaging company Macfarlane Group and construction company Breedon Group.

On the other hand, financials company Polar Capital was the largest contributor to returns as assets under management continued to grow. Life insurance company Chesnara also performed well as has miniature figures maker Games Workshop.