Montanaro UK Income GBP

An income fund focused on small and mid-cap UK equities, with some European exposure.

  • 127.50p
    Price (Inc)

    These are the shares in the fund that pay out an income to clients. The income is made up of the total dividends – the money a company can pay out to its investors – from the companies in the fund.

  • 120.90p
    Price (Acc)

    These are the shares in the fund that don’t pay out an income to clients. Any dividends – the money a company can pay out to its investors – are reinvested into companies in the fund. Despite no income, the shares should be worth more over time. Good incentive, eh?

  • 0.00%

    Initial charge

    Some funds charge you when you first invest, which is aptly known as the initial charge. They’re usually between 3-5% but at Bestinvest, we usually don’t charge you a penny!

  • 0.75%
    Annual management charge

    This is how much the fund management company charges to run the fund. It’s like paying a babysitter, dog sitter or house sitter (that makes well-informed, heavily researched changes to improve your baby/dog/house when needed).

  • 0.84%
    Ongoing charges

    This stands for Ongoing Charges Figure. It’s the cost of running a fund and includes admin fees, manager fees, administration costs, etc.

  • 3.20%
    Yield

    How much the fund is currently paying out in income to investors. It’s NOT to be confused with the overall growth of a fund – a very different thing indeed. It’s also NOT a guarantee of future pay-outs, just a snapshot. This is more what it’s not than what it is…

Prices as at 25 January 2022, fund commentary last updated 12 November 2021

The fund aims to deliver income and capital growth over any five-year period by investing primarily in small and medium-sized UK companies. Lead manager Guido Dacie-Lombardo and co-manager Charles Montanaro will invest at least 60% of the portfolio in UK companies with a maximum market value of £10billion – these can include Real Estate Investment Trusts (REITs). They can also invest up to 40% in larger UK companies, and up to 20% in European companies. The managers are bottom-up stock pickers with a quality growth style, focussing on identifying companies that deliver an attractive and growing dividend no matter the economic cycle. Their holdings include landscaping group Marshalls and self-storage firm Big Yellow.

Fund summary

Sector UK All Companies
Structure OFFSHORE FUND
Launched November, 2015
Size £955m
Yield 3.20%
Charging basis Capital
Dividends paid Mar, May, Sep, Nov

Charges

Standard initial charge 0.00%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 0.00%
Annual management charge 0.75%
Ongoing charges figure 0.84%

Allocation

Proportion (%)

  • {{chartDataItem.text}}
    {{chartDataItem.value}}

Allocation

Proportion (%)

  • {{chartDataItem.text}}
    {{chartDataItem.value}}

Allocation

Proportion (%)

  • {{chartDataItem.text}}
    {{chartDataItem.value}}

Investment process

The managers run an active bottom-up investment process with a focus on finding quality growth companies. These are firms who are market leaders with pricing power, a strong market position, high operating margins, and good management teams. They also need to be able to generate an attractive, sustainable, and growing free cash flow, which will ultimately fund long-term dividend and capital growth. The team generates their own investment ideas running proprietary screens, looking at growth themes and analysing a company’s quality, its finances including return on equity and ESG credentials. They place a huge value on going to meet management face-to-face. Indeed, the team conducted 498 site visits and company meetings in 2020. The ideas are then fed into a pan-European approved list of around 200 companies which are pitched to the Investment Committee. If approved, the companies are placed on the ‘quality approved list’. After finding these good businesses the managers then ask themselves whether they will also make a good investment. They look at a company’s valuation including free cash flow and dividend yield, its intrinsic value, and risks such as dividend safety, From this point the managers construct a portfolio of 50 names. Most holdings have a market value of between £1billion and £2.5billion.

Managers Guido Dacie-Lombardo and Charles Montanaro are hugely experienced and benefit from the support of a 15-strong analyst team boasting an average 16 years in the investment industry. The team has a clear focus on small and mid-cap stocks, believing that every investment portfolio should have some exposure to these companies. That’s down, the team says, to their proven long-term outperformance and higher dividend growth compared with their large-cap peers. The managers also believe that small and mid-caps are under-researched, making the market ripe with opportunity for those who invest in thorough analysis. The fund will typically lag when the market is led by large caps or by value stocks but historically it has generated very strong outperformance. It is a well-diversified portfolio and is a core option for income investors seeking exposure to small and mid-caps.

Manager research

Average monthly relative returns

  • 17/18 0.00%
  • 18/19 0.00%
  • 19/20 0.00%
  • 20/21 0.00%
  • 21/22 0.00%

Bestinvest MRI

  • 3 years 0.00%
  • 5 years 0.00%
  • Career 0.72%
  • 3 years 0.00%
  • 5 years 0.00%
  • Career 0.00%

Performance figures are based on the average of monthly percentage returns relative to the benchmark index.

Guido Dacie-Lombardo

Dacie-Lombardo is the lead manager of both the Montanaro UK Income Fund and the Montanaro Global Innovation Fund. He graduated from the University of Cambridge in 2008 with an MSci in Experimental & Theoretical Physics. He joined Rothschild in London where he advised UK and European clients on mergers and acquisitions, as well as a range of general corporate finance issues. After six years with Rothschild, Dacie-Lombardo joined Montanaro in 2015 as an analyst covering the Software, IT Services and Electronic Equipment sectors.

Track record

The track record of Guido Dacie-Lombardo in managing mutual funds in this sector is still too short for us to draw any meaningful conclusions and so our assessment is based largely on qualitative aspects.

Periods of worst performance

Absolute -6.00% (August 2021 - September 2021)
Relative -5.00% (August 2021 - October 2021)

About the MRI

Our unique indicator: the Bestinvest Manager Record Index (MRI) measures the likelihood that the fund manager is adding value through their decisions. It is based on their performance record over the course of their career, adjusted for the amount of risk taken. MRI is an important contributor to our fund rating system but it is also vital to take account of qualitative factors. It is also very important to select funds to form a cohesive portfolio with an appropriate overall risk level.

Allocation

Proportion (%)

  • {{chartDataItem.text}}
    {{chartDataItem.value}}

Allocation

Proportion (%)

  • {{chartDataItem.text}}
    {{chartDataItem.value}}

Allocation

Proportion (%)

  • {{chartDataItem.text}}
    {{chartDataItem.value}}

Key Investor Information - Income

Download

Key Investor Information - Accumulation

Download