Asset Manager Overview
Headquartered in London, Premier Miton Investors manage c.£10.3 billion of assets across a range of asset classes including equities, fixed income, multi asset and alternative investments. The business was created in November 2019 when Premier Asset Management Group plc and Miton Group plc merged. The merger brought together two groups with a number of complementary investment offerings. The group is a strong advocate of active fund management and its range of strategies tend to be run in a high conviction manner. Furthermore, the managers therein are very much given the autonomy to invest how they see fit given their respective skill sets and investment approaches.
Tellworth Investments (TI) was initially launched in October 2017 by co-founders Paul Marriage and John Warren, as a boutique investment management firm specialising in the active management of UK smaller companies. It was acquired by Premier Miton in late 2023, with the deal being approved in early 2024 with the TI team now having been fully integrated into the broader business.
Fund Manager/Team Overview
This fund is managed by Paul Marriage and John Warren. Mr Marriage and Mr Warren, have extensive experience of investing within the UK smaller companies space, having previously managed the Schroder UK Dynamic Smaller Companies fund, from 2006 and 2010 respectively (we would note that prior to 2013 this fund was the Cazenove UK Smaller Companies Fund). However, in July 2017 they left to set up TI, and this particular strategy was launched in November 2018. Additionally, the managers also ran two long/short funds at Schroders, which they continue to manage on an outsourced basis. The pair, who individually have investment careers spanning over 20 years have an extremely collaborative and collegiate working relationship.
Investment Philosophy & Process Overview
The process identifies quality companies across the bottom 10% of the market (by capitalisation) based on their growth and value potential, in order to construct a portfolio that can generate attractive returns for investors over the long run. The fund is unconstrained in its nature and bears little resemblance to its benchmark, the Deutsche Numis Smaller Companies plus AIM (ex investment companies) index. Instead the managers focus on the fundamental characteristics of individual firms to drive investment decisions. Within that, there are certain areas of the market that the managers simply will not invest in due to their opinion of the risks involved, and therefore the difficulty in pricing these areas of the market, such as oil & gas, mining, tobacco, biotech and gambling. They will also avoid any loss-making businesses and only hold firms with UK domiciled management teams. Given these restrictions the managers' investment universe is, generally halved to around 1000 stocks.
Ideas are generated from a number of sources including company meetings, quantitative screens and their own experience/knowledge. The managers carry out bottom-up fundamental analysis, in order to build a broadly balanced portfolio of quality companies, comprising of what are termed P3M stocks (product, market, margin, and management) and Value Opportunities. The former, which are defined as quality growth names, will generally steer the managers towards companies with attributes such as, strong market positions and quality management teams. Whilst the latter, accounting for the remainder of the fund's assets, will require the investee companies to have a contrarian investment angle, such as a management change or restructuring, in order to help drive a reappraisal of the valuation by the market. The managers also consider company management to be of great importance within this element of the process, and more specifically, if their interests are truly aligned with shareholders (i.e. they themselves have stock ownership) and whether they understand how to create value for shareholders. The strategy has evolved over time through the additions of alternative data sources and tools. In addition, the development of the team's ESG capabilities, and inclusion of this into the investment process, through a proprietary scoring system and extensive company engagement.
This approach leads to a relatively concentrated best ideas portfolio which is usually comprised of 40-60 holdings. Initial weightings are around 1%, with largest position sizes tending to be around 3%, at which point the managers in general would begin to trim the holding and take profit. The fund's turnover is expected to be 30-40% per annum, with sales tending to be undertaken for a number of reasons including changes in the investment case, the risk profile (e.g., poor liquidity, declining ESG attributes, full valuations), or other opportunity arising outside of the portfolio.