Best In Class  

Best in Class: Montanaro UK Income

The fund's focus on quality has historically helped provide some downside protection in falling markets versus other small-cap funds.

Mr Montanaro also avoids “lobster pot” Alternative Investment Market companies, due to their increased volatility and liquidity challenges.

The fund has an overall charges figure of 0.86 per cent, according to FE Analytics, February 2019.

Mr Montanaro believes UK small-caps continue to look cheap compared to equities on the other side of the English Channel and across the Atlantic, adding that the team expect investors with high allocations to overseas equities to address their underweights to sterling one day.

“It would be little surprise if the currency rebounded in the event of a Brexit breakthrough. In such a scenario, the quality companies within the fund should be well placed to benefit. And in the intervening period, with a dividend forecast of 3.9 per cent for 2019, investors are being paid to wait,” he added.

This fund offers something different to investors by way of a UK income solution that steers clear of the traditional large-caps so many other funds rely upon.

Naturally the fund carries additional risks given its greater exposure to smaller companies, but the focus on quality companies has helped to manage this and makes it an attractive option for investors.

Darius McDermott is managing director of FundCalibre