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F&C to launch European ex-UK small cap fund

F&C to launch European ex-UK small cap fund

F&C Investments is planning to launch a new European small-cap ex-UK fund in response to research showing demand for a product of this nature, according to firm’s UK’s sales head said.

Speaking to FTAdviser, Rob Thorpe said the firm is looking to launch the F&C European Small-Cap ex-UK fund early in the second quarter and is already engaging with clients, while an unspecified amount of seeding had already been arranged.

He explained that the Investment Association’s European small-cap sector has 15 funds in it and, of those, eight have UK equities in them, with an average weighting of 30 per cent, leaving only seven funds without a UK small-cap exposure.

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Mr Thorpe added that analysis and conversations with clients led to thoughts of creating an onshore version of [fund manager] Sam’s Cosh offshore fund, with the response being that most prefer continental Europe, because they like to allocate to the UK.

“What we’ve done is taken Sam’s portfolio which has about 25 per cent in UK equities and we’ve taken out all the UK holdings in there, run the performance on the fund since he started managing that fund, and that portfolio would have been the best performing European small-cap fund in that sector.”

Mr Thorpe noted that Mr Cosh’s pan-European smaller companies fund is not currently in the Investment Association’s sectors, but it will be added over the next few weeks.

Meanwhile, the firm is also looking to launch an onshore version of its F&C Property Growth and Income, one of very few funds that blends the benefits of bricks and mortar and property-related equities.

Mr Thorpe commented that this will be ready from 30 January, again in response to adviser and investor appetite for income, as the fund yields around 5 per cent.

He added that F&C would be expanding is distribution and sales team, with additional hires set to be announced in the coming months.

Plans are also afoot for F&C to launch the first Bank of Montreal products to retail investors, following its acquisition by the Canadian bank last year, while it would also be following up the intention to leverage its new parent’s expertise in the exchange traded funds and passive market, with an offering scheduled for the autumn.

Mr Thorpe stated: “BMO has got a 25 per cent share of the ETF market in Canada and about 60 strategies, so we are trying to work out what we can add to the market place in UK and Europe.

“We are working through that at the moment and speaking to clients in terms of what they use ETFs for what sort of strategies are missing. We want to enter the market, but we don’t want to do what everyone else is doing; we want to do something different and be a value add.”

ruth.gillbe@ft.com