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Close Investments has announced a new team for its UK smaller companies funds after Octopus Investments poached its UK smaller companies managers and Aim VCTs.

Deryck Noble-Nesbitt will head up the £9.7m Close Beacon Investment and the £3.8m Close Special Situations funds. He will bring his smaller companies team with him from Close Private Asset Management to help on the portfolios.

Sam Barton will join Mr Noble-Nesbitt from Unicorn Asset Management, where he ran smaller companies money for more than six years. Stephen Wood, a smaller companies analyst at Close Investments, will complete the team.

The boards of the three Close Aim VCTs announced last week that Andrew Buchanan and Kate Tidbury would continue managing them. Octopus will now replace Close Ventures on the administration of Close IHT Aim VCT, Close Brothers Aim VCT and Close Second Aim VCT.

Roland Kitson, sales and marketing director at Close Investments, said Mr Noble-Nesbitt would retain the same basic style as his predecessors. "Deryck has a very similar approach, but he also utilises other proprietary quant techniques to rationalise the universe of stocks."

Mr Kitson said the transition to any new positioning would be gradual. "It would be extraordinarily imprudent fund management to sell everything we have and start from scratch. Liquidity at this end of the market is not fantastic."

One of Mr Kitson's targets was to increase the funds' small size and close the gap in their performance. The Close Special Situations fund came 16th out of 55 funds over the year to 21 July, with losses of 25.8 per cent against 28.4 per cent for the UK Smaller Companies sector. But the Close Beacon Investment fund was placed 53rd, with a decline of 39.2 per cent.

"They're two very different vehicles," Mr Kitson said. "Special Situations might be investing in stocks with a market capitalisation of £1bn. Beacon is investing solely in Aim stocks, which have significantly underperformed the large caps. But it goes without saying we want to lift Beacon's performance."

Mr Kitson declined to comment on why Mr Buchanan and Ms Tidbury left Close for Octopus or whether Close would be seeking new Aim VCT businesses as a result.

Chris Hulatt, director and co-founder of Octopus Investments, said Octopus now had more VCTs than any other player. He predicted the VCT market would concentrate itself in the hands of fewer managers, although he said Octopus would not be taking on new VCTs simply to gain critical mass.