Funds come in all shapes and sizes, yet investors may instinctively gravitate towards the biggest and most established names for their stability, scale and long tracker records.
However, smaller, lesser-known strategies can also play a valuable role in portfolios, offering differentiated exposures and sources of performance that are harder to find in more benchmark-aware vehicles.
They can also benefit from their compact scale, which should allow them to exploit less liquid options and build higher-conviction portfolios to sit alongside larger core holdings – contributing to overall diversification. On the other hand, costs and closure risk might be something to keep in mind with smaller strategies.
Below, Trustnet asked fund selectors which funds with less than £250 assets under management (AUM) they rate.
Dzmitry Lipski, head of funds research at interactive investor, suggested First Eagle US Small Cap Opportunity, which was launched in February 2022 and has just over £150m in assets.
It gives investors exposure to small- and mid-caps in the US equity market and is managed by Bill Hench, Rob Kosowsky and Suzanne Franks. They utilise a bottom-up process and fundamental analysis to construct a diversified portfolio of between 180-300 holdings – a large number that helps “to reduce stock-specific risk while capturing a broad opportunity set”, Lipski said.
“The emphasis is on inefficiently valued assets, turnaround situations, accelerating growth businesses and overlooked market leaders,” he added.
The portfolio is currently tilted towards industrials, technology, materials and healthcare.
“Overall, it provides differentiated exposure to US smaller companies with the potential for attractive long-term risk-adjusted returns, particularly in an environment where dispersion across stocks remains elevated,” Lipski said.
Jason Hollands, managing director at Bestinvest, highlighted WS Guinness Global Energy, which has £75.3m in AUM.
Hollands said the fund has a “clear and disciplined” investment approach and a strong management team in Jonathan Waghorn, Tim Guinness and Will Riley.
“While it may appear modest in size as a standalone product, it is effectively a UK onshore version of a strategy has been managed for over 20 years by a specialist boutique with deep expertise across both traditional and sustainable energy sectors,” Hollands said.
Predominantly focused on value opportunities in the oil and gas sector, the portfolio is constructed on a ‘best ideas’ basis, holding 30 equally weighted positions – narrowed down from a universe of around 350 companies through fundamental analysis and macroeconomic considerations.
There is also a strong emphasis on liquidity and risk management within the portfolio, the most holdings in companies with market capitalisations above $1bn, including ExxonMobil, BP and Chevron.
Year-to-date, the fund has gained 31%, beating the IA Commodity/Natural Resources sector average of 17.6% and outperforming the MSCI World/Energy index, which has posted a 27.7% return.
Over five years, the fund falls short of the benchmark by around three percentage points but still outpaces the sector average.
Performance of the fund vs sector and benchmark over 5yrs
Source: FE Analytics
Ben Yearsley, director at Fairview Investing, picked Amati Strategic Metals – a £120.5m fund.
“Its investment thesis highlights the increasing demand for critical minerals in renewable energy, electric vehicles and advanced technologies,” he said.
“By targeting high-growth industries and supply chain constraints, the fund appeals to invests seeking exposure to the global shift toward decarbonisation and technological advancement.”
The fund has been co-managed by Georges Lequime and Mark Smith since 2021.
Last year, it delivered a first- quartile return in the IA Commodity/Natural Resources sector, gaining 162.1% – far outstripping the sector average of 29.5%. It also more than doubled the MSCI World/Metals & Mining return of 53.4%.
Yearsley noted its shouldn’t be the only commodities fund in an investor’s portfolio, suggesting it could sit alongside a larger vehicle such as BlackRock World Mining.
Elsewhere, Kate Marshall, lead investment analyst at Hargreaves Lansdown suggested the £157.6m Schroder Asian Discovery fund.
It invests in small- and medium-sized companies across Asia (excluding Japan) that have displayed growth potential.
“This makes the fund unique compared with most Asian equity funds that focus on larger businesses,” Marshall said.
The fund is co-managed by FE fundinfo Alpha Manager Robin Parbrook and Alexander Deane. Marshall highlighted Parbrook’s status as a veteran investor in Asia, having joined Schroders in 1990 and subsequently spent a large part of his investment career living in the region.
“He has historically demonstrated good stock-picking ability,” Marshall said.
Current top holdings in the fund include Singapore Exchange, BE Semiconductor Industries and City Union Bank.
The fund posted a five-year return (to the end of March 2026) of 17.3%, placing it in the third quartile of the IA Asia Pacific excluding Japan sector.
Performance of the fund vs sector and benchmark over 5yrs
Source: FE Analytics
Marshall also suggested the €143.9m Polar Capital European (Ex UK) Income, which has been managed by Nick Davis since 2015.
Davis focuses on a portfolio of between 25 and 50 undervalued companies that are compounding dividend yield and growth, including TotalEnergies, Iberdola and Enel.
“Overall, Davis takes a more conservative approach, which means the fund could provide greater stability than others during tougher times,” Marshall said.
“This makes the fund different from other European funds that focus on companies with high-growth expectations.”
Breaking down Europe country-by-country, the fund has the highest allocation to France (32.4%), followed by 14.5% invested in Spain and 9.9% in Germany.
Finally, Paul Angell, head of investment research at AJ Bell, highlighted the latest fund in Artemis’ SmartGARP suite.
The $87.2m Artemis SmartGARP Global Emerging Markets ex China fund was launched in January of this year, with AJ Bell one of the seed investors. It is managed by Alpha Manager Raheel Altaf.
“The addition of the fund to our active portfolios follows our breaking out of Chinese equities from a broader emerging markets allocation last year,” he said, noting he believes “this is a superior way to allocate to the region as it allows us to isolate and manage our standalone China equity position – a market containing unique risks that often lead to very different valuation and market cycles versus global equities”.
The fund utilises Artemis’ ‘SmartGARP’ process – a systematic investment approach that blends quantitative and qualitative analysis to avoid value traps or overly optimistic growth forecasts. It was originally designed for a strategy investing in Europe but over time has been broadened to include UK, global and emerging market equity funds.
“The performance of the [SmartGARP] franchise reflects this with their funds’ top quartile over various time periods,” Angell said.
Artemis SmartGARP Global Emerging Markets ex China has gained 12.4% since launch.
Performance of the fund vs sector since inception
Source: FE Analytics