SLI readies global small-cap fund for Nimmo

Standard Life Investments is looking to combine its global equity and small cap capabilities by launching a global small-cap fund for star manager Harry Nimmo.

The Global Smaller Companies fund, slated for launch in Q1 2012, will act as a complement to, rather than a replacement for, the soft-closed £1.3bn UK Smaller Companies fund on which Nimmo has built his reputation.

The new offering would mark the first time Nimmo has invested on a global basis, giving him the ability to select stocks across both developed and emerging markets. It is believed the fund would hold between 40 and 80 stocks, similar to Nimmo's UK small-cap fund.

Nimmo has managed that fund since inception in 1997, and also runs the £177m UK Smaller Companies trust as well as the Scottish Widows HIFML UK Smaller Companies Alpha fund. He managed SLI UK Opportunities on an interim basis in 2007.

"Standard Life Investments is looking at the possibility of launching a Global Small Cap equity fund, which would be an extension to our strong performing UK and European smaller company fund range. We feel this could be a very exciting opportunity", an SLI spokesperson said.

The new portfolio is likely to be benchmarked against a global small-cap index, in keeping with funds such as the £383m Invesco Perpetual Global Smaller Companies, which is benchmarked against the MSCI Global Small Cap Index, covering 24 developed markets, 21 emerging markets and 26 frontier markets.

Though there are a limited number of global small-cap funds available to UK investors, such offerings boast strong track records. The Invesco Perpetual fund is top quartile in the IMA Global sector over three years, as is the £40m McInroy & Wood Smaller Companies fund. Other fund houses including Schroders and Franklin Templeton offer access to the sector through their SICAV ranges.

Continued inflows into Nimmo's UK Smaller Companies fund led SLI to soft-close it earlier this year, to ensure the fund's ability to invest across the UK small-cap universe would not be compromised by its size.

The fund is top quartile over one year and three years, returning 52.4% over the three years to 5 August versus an IMA UK Smaller Companies sector average of 29.5%. On a one-year basis it has returned 22.6% against a sector average of 15.4%.

SLI's existing smaller companies capabilities also include Ken Nicholson's €77m European Smaller Companies SICAV, which has returned 25.1% over the three years against a small cap sector average of 0.3%, according to FE.