Montanaro fund lands on adviser buy list

Montanaro UK Income has been promoted to The Adviser Centre’s recommended funds list more than four years since its mandate shifted from pan European equities to UK focussed.

Montanaro fund lands on adviser buy list

Despite being named Montanaro UK Income, The Adviser Centre said the fund’s “overt” growth style differentiates it from its rivals as well as its structural bias to mid and small-cap companies.

It is managed by the boutique asset manager’s founder Charles Montanaro (pictured).

Research director Gill Hutchison said The Adviser Centre has been observing the fund’s performance through different market conditions since it changed from pan European to UK focussed in 2014. It previously featured on the research agency’s positive watch list.

Adviser Centre recommendations focus on funds that are widely available via platforms and have the capacity to grow assets.

Hutchison described the UK Income fund as an interesting diversifier when blended with larger-cap mandates.

“The team’s focus is on delivering an attractive yield with the potential for above-average dividend growth.

“By nature, Mr Montanaro and his colleagues are growth investors, but their embedded emphasis on cashflow analysis provides a strong foundation for this income mandate.

“They believe that by combining growth stocks and yield stocks, using a process that emphasises proprietary research into smaller-cap companies, they have the opportunity to generate strong returns over a multi-year period.”

Additionally, the Montanaro UK Income fund is also on FE Invest’s Approved List.

Charles Younes, research manager at FE, said Montanaro’s focus on smaller companies ensures a larger pool in which to target dividend paying companies.

He said: “On a portfolio level, smaller cap income managers are able to provide similar dividend and yield to their larger cap peers, with greater capital and dividend growth potential.

“The fund’s lack of unquoted names should provide slightly more protection than similar lower cap income managers.”

Younes added that the team has a repeatable process suitable for investors seeking income and some diversification from larger cap income managers.

Montanaro UK Income performance



6m1 year3 year

5 year

Montanaro UK Income




IA UK All Companies




Source: FE

Earlier this month, Chelsea Financial Services ranked Montanaro UK Income as one of the cheapest UK equity funds to deliver top-quartile performance, based on its seed share class, which had an OCF of 0.35%.

The £275m fund now has an OCF of 0.85%.

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