Montanaro is an independent fund management group established in 1991.  We research and invest in European and UK quoted SmallCap companies with an emphasis on “smaller” companies.  This is all we do so clearly it is critical to make sure that we get it right.  Most of our clients are leading financial institutions including wealth managers, insurance companies, pension funds and local authorities.

Since long term returns from the European quoted small companies market can be so much greater than those from large companies, as well as offering uncorrelated returns, we believe that all sophisticated investors should invest in them.  Many will not do so directly due to the high cost of a dedicated SmallCap team and the time needed to research and invest.  Therefore, the best solution is to use an independent specialist such as Montanaro with the resources to capture the superior returns available from this attractive asset class.

Montanaro has one of the largest investment teams dedicated to Pan-European SmallCap investment comprising a total of 23 people with seven different nationalities based in London.  With 16 investment professionals, including 9 research analysts, we believe in doing our own research and making our own decisions rather than relying on brokers.  We focus on investing in the highest “quality” companies because we recognize that returns are a function of risk and prefer to take a conservative, low risk approach to stock selection.  We aim to outperform the small company market consistently irrespective of market cycle.  Our longest standing investment trust has outperformed in 12 out of 14 fiscal years, a track record few, if any, can match.

We believe that there are three excellent reasons for sophisticated investors to invest in SmallCap equities:

1.         over the long term SmallCap equities outperform Large Cap equities. Looking at the UK as a proxy for Europe as a whole (because data goes back further) and using data from Barclays and ABN/HGSC, this SmallCap effect has delivered extra returns of 2.9% per annum.  Given that UK equities provide long term real returns of about 6% per annum this represents very material incremental performance;

2.         research into SmallCap companies is usually sparse and less detailed than for Large Cap companies.  This means it is possible for an investment manager who does thorough, proprietary and detailed research to outperform;

3.         over most time periods SmallCap equities offer good diversification, a very different sector profile and can reduce the overall risk of a portfolio.