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Guide to European Smaller Companies Funds

    Guide to European Smaller Companies Funds


    A ‘European smaller companies’ fund does exactly what it says on the tin and only invests in the shares of smaller companies in Europe.

    Smaller companies are typically defined as those that have a market capitalisation of less than €5bn (£3.5bn).

    Far from being just looking at small scale businesses these funds offer exposure to a broad portfolio of innovative and fast-growing firms that managers in this field feel have greater potential to benefit from merger and acquisition activity.

    It is vital that advisers grasp what drives performance of these funds and the part they can play in an investor’s portfolio.

    This guide will explain the pros and cons of european smaller companies funds, the impact of economic developments on this type of vehicle and the potential returns that investors can expect.

    Contributors of content to this guide are Ollie Beckett, manager of Henderson Horizon Pan European Smaller Companies fund; Alain Caffort, co-manager of the Pictet Small Cap Europe fund; Nick Williams, head of mid and small cap equity team and manager of the Baring Europe Select trust at Baring Asset Management and Laurent Inglebert, investment manager at Aberdeen Asset Management.

    In this guide


    Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

    1. By how much has the MSCI Small Cap Europe index increased in 2015 up until the end of May?

    2. What does Mr Inglebert say is behind the increase of European smaller companies being acquisition targets?

    3. What markets are European smaller companies typically active in, according to Mr Beckett?

    4. What does Mr Williams say has held back European smaller companies funds?

    5. What does Mr Caffort say European smaller companies funds within a global or European equity allocation allows an adviser to add to an investor’s portfolio?

    6. What does Mr Beckett warn could cause the value of investments to fall or rise independent of the underlying holdings?

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