The fund aims to generate growth over the long-term, with a focus on preserving capital. The team invests in a portfolio of up to 40 UK companies listed on AIM - typically those with a market capitalisation of under £350 million* at the time of investment.
Your capital is at risk and you may not get back the full amount you invested. Investments in this fund are for the long term and higher risk compared to investments in solely larger, more established companies. Please read full details of the risks here.
What do I need to know before investing?
Where and how is my money invested?
The fund has a proactive private equity approach to investing and seeks to invest in companies that have a market capitalisation of under £350 million* at the time of investment, otherwise known as ‘micro-cap’ companies.
We believe the market’s valuation of this sector is inefficient due to a lack of analyst coverage, low trading volumes and often a lack of good corporate governance. Our rigorous bottom-up approach involves proprietary research and extensive due diligence, taking up to 18 months to gain a comprehensive understanding of each company.
The fund's strategy is to unlock value in profitable smaller businesses that have a sustainable competitive advantage and a strong management team. The team follows a value mandate, seeking to invest in businesses which are trading at a discount to our determination of intrinsic value.
Position sizes in the portfolio are based on a function of both margin of safety and conviction, and liquidity.
We believe that the fund is diversified, blending a mix of good value growth companies with large strategic holdings of 3%-25% of the equity in investee companies. As significant shareholders, we can actively engage with and influence the company and try to make greater returns for our investors.
We reinvest any income generated to help grow the value of your investment.
*Please note, the fund retains its ability to hold shares in companies which are capitalised greater than £350 million where it is deemed beneficial to the fund.
What's the investment process?
Our typical investment process is laid out below:
- Screening 2,500 companies for investment opportunities.
- Undertake initial due diligence on 200 companies.
- Produce a headline investment paper.
- Conduct fundamental analysis.
- Perform financial modelling.
- Determine valuation analysis.
- Produce full investment paper.
- Invest funds in companies.
- Daily monitoring of 25-30 companies.
What are the risks?
Our investment funds are not suitable for everyone, so we recommend seeking financial advice. This fund may not be appropriate if you plan to withdraw your money within five years. As with all investments, there are risks you should be aware of and comfortable with before you invest.
- The value of your portfolio can go down as well as up so your capital is at risk and there is no guarantee you will get your investment amount back.
- Investing in smaller companies is generally higher risk compared to investing in blue chip companies on a main stock exchange.
- The companies the fund invests in may be significantly more volatile and be less liquid than many other investments.
- The past performance of our fund is not a reliable indicator of future results.
Please note this is only a brief overview of the risks involved with investing in the UK Micro-Cap Growth Fund. Please read full details of all the risks here before investing.
What are the charges?
These charges cover the management, administration, marketing and distribution costs of running the fund. These charges reduce the potential growth of your investment.
B class and C class shares: up to a maximum 5% of the amount of money you invest.
No exit charge.
Annual management charge:
B class shares: 1.00% p.a. based on the value of your investment.
C class shares: 0.75% p.a. based on the value of your investment.
There may be further charges for buying and selling assets for the fund and 'dilution levy' costs associated with entering or exiting the fund, this is to cover costs associated with your transaction.
B class shares: 1.42% (as at 31 January 2019).
C class shares: 1.17% (as at 31 January 2019).
For more information about charges please read the fund prospectus - hosted on Maitland Administration Services Ltd.
Who's the team behind the MI Downing UK Micro-Cap Growth Fund?
The fund is managed by award-winning* fund manager Judith MacKenzie. Judith formed the Downing Public Equity team in 2011. In March 2020, it was rebranded to Downing Fund Managers. They are a team of ten, who manage over £190 million in publicly listed assets (as at 31 July 2020). The investment team have many years’ experience across both private and public equity markets.
Downing Fund Managers is a boutique asset management business, drawing on Downing LLP's 30-year venture capital track record.
Our investment committee draws on a significant number of years investment experience to provide risk oversight on new investments and portfolio management.
*Named Small Cap Fund Manager of the Year, Small Cap Awards 2015 and Small Cap Awards 2013 for the Downing UK Micro-Cap Growth Fund.