By ROBERT HARLEY 05/05/2008
We recently met with Chris St John, the newly appointed manager for the fund. St John has been running small cap mandates at AXA Framlington for three years and is familiar with the bulk of the portfolio. We gather AXA Framlington will be seeking to recruit another investment professional for the small cap team, in the meantime St John also has the support of Brian Watson, an existing small cap specialist, and other members of the AXA Framlington UK equity team. The intention is to retain the bias of the fund within the small cap arena i.e. it will continue to focus on sub £100m market cap companies.
We still have some concerns regarding the large size of assets under management given the deterioration in liquidity in this part of the market. Consequently, we would consider this a more risky proposition within the small company fund space. In view of the pain existing investors have already suffered, we see little point in switching it to other small cap managers at this stage and suggest waiting until the relatively low valuations in this part of the market have recovered. We have introduced a hold rating for the fund.