AllianceBernstein’s new large cap ETF, The SEC gets ‘investment term’ serious, small-cap managers outperform, Dumb Money is coming, Franklin Templeton’s divis, Pictet on building and much more.
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.
|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%|