The Amati Smaller Companies fund is a strategy that entered Square Mile’s Academy of Funds in early 2020 and it has subsequently been added to a number of our portfolios.
Amati is an Edinburgh-based investment boutique, focussed on investing in UK smaller companies. It is not a well-known asset management company, which forms part of its attraction, but it has nonetheless forged a very solid reputation in investing in the UK smaller companies sector.
The business was formed in 2010 but Dr Paul Jourdan, co-founder and one of the three portfolio managers responsible for this fund, has managed the strategy since 2000. His co-managers, David Stevenson and Anna MacDonald, are both very experienced and they enjoy additional support from Dr Gareth Blades.
Their highly collaborative culture has developed an investment approach that supports the firm’s basic philosophy that superior returns can be achieved by investing in high quality companies and holding them for the long term.
When analysing potential investee companies, the team emphasises aspects such as a firm’s competitive advantage; its business lines; its pricing power, as well as the strength of the company’s balance sheet strength and levels of cash flow. The final portfolio is typically invested across 55 to 65 holdings and bears little resemblance to its benchmark – Numis Smaller Companies plus AIM (ex investment companies).
The fund’s focus on quality companies does mean that the return profile should hold up better than its benchmark in more troubled times as indeed was the case in Q1 of last year. While it might lag when markets are more exuberant, over longer time frames the strategy will deliver attractive risk adjusted returns in our view, justifying its place within portfolios.
John Monaghan, Head of Research
