Posted inHead To Head

HEAD-TO-HEAD: Barings versus Merian

FSA compares two European (ex-UK) small-cap equity products: the Barings Europe Select Trust and the Merian Europe (ex UK) Smaller Companies.
by Rupert Walker

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INTRODUCTION

European smaller companies are an under-researched asset class, according to Darius McDermott, managing director at Chelsea Financial Services,

They are also historically cheap, he points out.

“Research from Credit Suisse shows that European smaller companies are now trading at their cheapest level relative to large-caps since 2002,” he told FSA.

McDermott attributes this dislocation to benign economic conditions and central bank liquidity flooding, which have supported large-cap stocks, many of which have reached elevated valuations.

“Prices of larger companies have been driven higher by structural headwinds and by herding tendencies among investors,” said McDermott.

“In this environment a strong active manager of smaller cap stocks can provide once-in-a-generation type returns,” he said.

Against this backdrop, FSA asked McDermott to compare two European (ex-UK) small-cap equity products: the Barings Europe Select Trust and the Merian Europe (ex UK) Smaller Companies.

Barings Merian
Size $1.62n $20.1m
Inception 1984 2014
Managers Nicholas Williams, Colin Riddles, Rosemary Simmonds Mark Heslop, Mark Nichols
Three-year cumulative return 11.66% -7.80%
Three-year annualised return 3.31% -2.37%
Three-year annualised alpha 2.32 -4.98
Three-year annualised volatility 21.33% 24.66%
Three-year information ratio 0.41 -0.87
Morningstar star rating **** **
Morningstar analyst rating Silver Neutral
FE Crown fund rating *** *
OCF (retail share class) 1.55% 1.20%
Source: FE Fundinfo, Morningstar. (Data in US dollars, 12 November 2020)

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