Stuart Widdowson, GVQ Investment Management (GVQIM) executive director and lead manager of the £150m Strategic Equity Capital trust, has resigned from the company to start an investment business with Harwood Capital.
Mr Widdowson joined GVQIM in 2006 and made his name running the investment trust, which has returned 174 per cent over the past five years.
He and former HgCapital chief executive Ian Armitage have now partnered with Harwood to launch a small-cap focused investment business.
Harwood said it "had identified a significant gap in the current market and believes that investors are increasingly looking for long-term, unconstrained, concentrated opportunities to invest in publicly listed small to medium-sized quoted companies".
Mr Armitage will chair the new business.
Meanwhile Jeff Harris, who joined GVQIM as an analyst in 2012 and has worked alongside Mr Widdowson since 2014, will take over the Strategic Equity Capital portfolio.
The share price of the investment trust, which invests in listed UK smaller companies, dropped 5 per cent this morning on the news of Mr Widdowson's departure.
"It is not yet clear to us what the longer-term implications are for SEC," said Numis. "We do not expect any changes to the investment approach but Stuart was very much the face of the company with shareholders, and we can understand that investors will be cautious in the near term."
Mr Widdowson and his immediate family owned some 625,100 shares in the trust at the end of 2016, with a value of around £1.25m.
GVQIM continues to headed by chief executive Jamie Seaton, who serves as lead manager on its UK Focus and Opportunities funds.