As Marlborough Multi-Cap Income Fund's (GB00B908BY75) name suggests, it can invest across the market cap spectrum but its managers have chosen to focus on small and mid-cap companies. The fund was launched nearly four years ago on the premise that smaller companies tend to outperform larger ones over the long-term.
"We believe smaller companies have the ability to grow their earnings faster and so should be able to grow their dividends faster," says Siddarth Chand Lall, co-manager of Marlborough Multi-Cap Income Fund. "The opportunity set has widened and there are 700 plus stocks in our universe - the number of small and Alternative Investment Market (Aim) shares which offer income is growing. And a fairly large number of these are below investors' radars."
Smaller and Aim companies are less well researched than large-caps.