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Unicorn UK Smaller Companies

Elite Rated by FundCalibre

A very high conviction UK smaller companies fund composed of around 40 stocks. It focuses on company fundamentals and aims to make long-term investments. Unicorn beat all other asset managers to top the 2016 FundCalibre Fund Management Equity Index and that was in part due to the excellent performance of this fund.

Company Description

Founded in 2000, Unicorn is an independent boutique asset management business which specialises in UK smaller companies. They offer both open and closed ended investment funds, including an AIM Venture Capital Trust (VCT).

Unicorn topped the 2016 FundCalibre Fund Management Equity Index after delivering outstanding outperformance for their investors. Their average fund beat their peers by 35% over a five year period.

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Fund Manager

Prior to joining Unicorn, Simon worked as a research analyst for JM Finn & Co. He joined Unicorn in 2008. Simon became lead manager of the UK Smaller Companies fund in December 2013. He is a qualified chartered accountant.

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Smaller company investing is fascinating; the real opportunity and intrigue lies in uncovering some truly hidden gems at the lower end of the market cap spectrum.

Simon Moon - Fund Manager

The Investment Process

The investment process begins with a number of quantitative screens, for profitability, debt levels and analyst coverage. The fund avoids companies in the oil & gas, mining and biotech sectors. All companies must be profitable at the point of investment. This fund prioritises individual stock selection rather than positioning the portfolio for a particular macroeconomic view.
The team looks for stocks with lasting competitive advantages, experienced management teams and strong balance sheets. Regular company meetings are key – it is very rare that an investment is made in a stock without a face to face meeting.

Risk

The concentrated nature of the fund does open it up to some stock specific risk. However, this is mitigated by the teams conservative and disciplined investment approach, which avoids loss-making and heavily indebted companies. Individual holdings are typically limited to a 5% position in the portfolio, which reduces the risk of one large holding hurting the fund’s performance.

Our Opinion

This is a small, flexible fund with a solid investment process and a highly competent team. We like the focus on company fundamentals and understanding businesses in detail. Another positive is that the fund avoids low quality cash-burning stocks. The fund is also quite concentrated, which allows it to capture the performance from its best ideas. We are confident the fund can continue to do well in the future.

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©2014 FundCalibre Limited. All Rights Reserved. The information, data, analyses, and opinions contained herein (1) include the proprietary information of FundCalibre, (2) may not be copied or redistributed without prior permission, (3) do not constitute investment advice offered by FundCalibre, (4) are provided solely for informational purposes and therefore are not an offer to buy or sell a fund, and (5) are not warranted to be correct, complete, or accurate. FundCalibre shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, this information, data, analyses, or opinions or their use. The Elite Fund rating is subjective in nature and reflects FundCalibre’s current expectations of future events/behaviour as they relate to a particular fund. Because such events/behaviour may turn out to be different than expected, FundCalibre does not ,guarantee that a fund will perform in line with its FundCalibre benchmark. Likewise, the Elite Fund rating should not be seen as any sort of guarantee or assessment of the creditworthiness of a fund or of its underlying securities and should not be used as the sole basis for making any investment decision. FundCalibre disclaims any responsibility for trading decisions, damages or other losses resulting from any use of the Elite Fund rating.