Overstone UCITS Global Smaller Companies Fund
Capture the small cap premium through a classic value based approach.
Investment objective
The objective of the Fund is to attempt to achieve over the long term a total return in excess of that of the MSCI World Small and Mid Cap Index (with net dividends reinvested). The Fund seeks to achieve its objective through investment in a concentrated portfolio of equity and equity-related securities of primarily small and medium-sized companies, selected from all the major markets and to a lesser extent from emerging markets worldwide. The approach is focussed on valuations and bottom-up fundamental research of individual companies.
Fund particulars
Launch date | 01 October 2007 |
Fund size | US$37.8m |
Domicile | Ireland |
Structure | UCITS |
Base currency | USD |
Dealing | Weekly (Wednesday) |
Min. investment | US$10,000 |
Benchmarks | MSCI World Small Mid Cap |
MSCI World |
Portfolio manager

Harry Fraser
Harry Fraser
Harry joined OP in August 2011. He was previously employed by Herald Investment Management as a research analyst covering the media sector for a total of 5 years. He graduated from Newcastle University. He manages global smaller companies portfolios and contributes to the overall investment selection.
Latest publications

Latest publications
Global Smaller Companies Strategy
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Commentary
If we look back over the last decade there have been many significant events that were expected to have a lasting impact on economies around the world: the Arab Spring, the European government debt crisis, the UK leaving the EU and the election of Donald Trump to name a few; and yet most economies have continued to motor along unaffected.
At first glance this crisis looked like it would be different, as governments around the world shut down whole industries and countries suffered record-breaking recessions. However, we suspect that this too will be a mere blip in economic history. Much of the damage has been self-inflicted and, with savings at record levels, the recovery is expected to be quick once economies are reopened. In addition, while COVID-19 is undoubtedly a particularly unpleasant virus, it does not compare to the terrible pandemics of the past. The average age of those who have died is over 80, and the (albeit understated) global death figure of 1.9m is around 0.02% of the world’s population. The impressive speed of vaccine development has also given us a relatively quick route out of this crisis.
Our fund was poorly positioned going into the year, given half of it was invested in sectors that were shut for large parts of 2020. We also severely underestimated the response of governments around the world, not realising that western governments could (let alone would) follow the lead of China in restricting the basic freedoms of their populations. This lack of foresight meant that by 18th March the fund was down 52% compared to 37% for its benchmark.
However, we were more active this year than we have been in the past ten. In February, we were worried enough that we raised nearly 7% in cash, the highest amount under Harry Fraser’s management. This was then fully invested by the middle of March in some of the worst hit companies. We sold Spirit
Commentary
Airlines and Petroleum Geo-Services as their balance sheets took a major hit, and bought three new stocks: Shop Apotheke, National Oilwell Varco and Allegiant Travel. We also received takeover offers for our participation units in Draegerwerk and for CPL Resources. The fund finished the year 16% higher than if we had done nothing but was still a long way behind its benchmark.
The strange nature of the market in 2020 meant that the difference between the best and worst performers was at extreme levels. Our online companies Zooplus, Gaia and Shop Apotheke all performed exceptionally well while our airlines, energy companies and retailers fell sharply. Although the fund performance finished up 7%, half the portfolio was down by an average of around 30%.
The UK reached a trade agreement with the EU in December which reduced some of the uncertainty hanging over the UK market. Nevertheless, domestic UK companies remain at a discount to their global peers and, according to the FT’s latest survey, most economists still believe that, of its peers, the UK will be the slowest economy to recover. We think the worst is priced in, and if the UK economy does better than most expect then many of the fund’s stocks will benefit from a rerating.
Assuming the vaccine rollouts are successful, we think economies will recover strongly in the second half of this year. We have a portfolio of well-run businesses, with strong balance sheets that now have better competitive positions than they had a year ago. On recovered earnings, the portfolio is on 11x, less than half that of the overall market. We see over 50% upside to target prices and are optimistic about the year ahead.
Change to dealing arrangements
We have decided that it would be beneficial for the fund to move from weekly to daily dealing. We will be applying to the Central Bank of Ireland to switch to daily dealing with settlement on a T+5 basis.
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