Small cap now 'obvious hunting ground' for income seekers

The sell-off in UK smaller companies has created a far more attractive hunting ground for income seekers than that offered by larger companies, according to Charles Montanaro.

Montanaro said this year’s rotation to ‘safer’ large-cap names has left smaller companies looking particularly attractive. His £70m Montanaro Equity Income fund has a preference for UK small- and mid-cap companies – in total they account for the vast majority of the portfolio – and the lesser-known names have so far proved a fertile place for the manager to find top performing stocks. Over three years, the fund has beaten peers to return 65.2% to 6 October versus a sector average of 50.7%, according to FE. This year’s sell-off in the smaller end of the market, which has left the in...