Favourite funds update - 16 October 2024

The AJ Bell Favourite funds list is designed to lighten your research load.

There are thousands of funds out there – so we’ve narrowed the field by selecting a high-quality shortlist of funds we believe can deliver their objectives over the long term. To make the list, each fund needs to pass our robust, independent selection process.

What have we changed?

We keep our Favourite funds list under constant review to ensure we have the highest conviction in the selected funds. And we keep an eye open for other funds that may have higher potential to achieve their objectives, or that represent better value. We also look to add new funds to the list, if we feel there are asset classes or areas of the market that our investors aren’t currently provided for.

Recently, we’ve made some changes following a review of the UK smaller companies sector.

WS Gresham House UK Smaller Companies fund

We’ve chosen to add the WS Gresham House UK Smaller Companies fund because of its capable management team, differentiated approach and credible performance track record.

At the helm is Ken Wotton, who has led the fund since its launch in 2019. Wotton’s investment career started over two decades ago as a private equity investor, before he established the public equity markets team that supports this fund in 2009. The team is made up of five investment professionals, with a mix of both public and private market experience, who look to harness their private equity experience within public markets. Their aim is to understand the management teams, business strategy, market positioning and financials of investee companies to settle on a fair value.

Their research goes beyond reviewing reports and accounts and meeting company management teams. They also take advantage of a large network of external contacts who offer in-depth insights into industry specifics that the team may otherwise not know. The resulting portfolio consists of around 40 individual stocks, with a particular focus on companies with a market capitalisation between £250m–£1bn.

FTF Martin Currie UK Smaller Companies fund

We’ve removed the FTF Martin Currie UK Smaller Companies fund because we have less conviction in its management team. In recent years the investment team at the Leeds office has been overhauled, with some experienced investors departing. Since the changes, the fund’s performance has been mixed, and we believe investors could be better placed with our other options in the sector.

WS Amati UK Smaller Companies fund

Similarly, we’ve removed the WS Amati UK Smaller Companies fund because of a decline in our conviction in the fund. The lead manager, Dr Paul Jourdan, has shown he is a capable investor with a strong track record investing in the sector. But we believe he may be overstretched in his roles as lead portfolio manager on this fund, the Amati’s VCT and an IHT offerings, alongside his CEO responsibilities.

Montanaro UK Income fund

Finally, we’ve removed the Montanaro UK Income fund as we think the fund’s design is overly complex for our Favourite fund list – although we still think the team and process of the fund is credible. The fund has a mix of characteristics, with a strong tilt to smaller and medium sized growing companies, alongside a requirement for income. This blend makes it difficult for investors to evaluate the fund’s performance, as the benchmark and peer group isn’t representative of how the fund is managed. As such, while the fund has its merits, we believe investors could be better served with other, more straightforward, approaches within UK equities.