The asset manager behind two top performing funds is to apply its winning investment strategy to a new investment trust.

Sanford DeLand will float Buffettology Small Companies Investment Trust on the London market at the end of October, following a similar investment style to legendary investor Warren Buffett.

Sanford DeLand likes to invest in companies whose shares can be bought at a fair price versus the estimated intrinsic value of the business.

Its CFP SDL UK Buffettology Fund has achieved 26% total return over the past three years and its Free Spirit Fund has achieved 38.8% total return over the same period, both top quartile performances according to FE Fundinfo.

These funds can invest in large, medium and smaller-sized companies with Free Spirit having a slight bias towards technology firms.

Keith Ashworth-Lord, Sanford DeLand chief investment officer, says the £1.3 billion open-ended CFP SDL UK Buffettology Fund has become too big to invest in micro-cap stocks, hence why the investment trust is being launched to mop up opportunities in that space.

The asset manager runs concentrated portfolios so CFP SDL UK Buffettology Fund would run the risk of having to own a large chunk of a company if it were to invest in the micro-cap space, which has happened in the past and something Ashworth-Lord wants to avoid again.

Retail investors will have the opportunity to take part in the IPO (initial public offering) with Sanford DeLand targeting at least £100 million to fund the initial portfolio. The annual management charge will be 0.65%.

It intends to have at least 70% of the investment trust’s portfolio different to holdings in the two open-ended funds.

The investment universe will be companies valued at between £20 million and £500 million listed on London’s Main Market and AIM, with no intention to look at unquoted companies or overseas-listed stocks.

Shares recently interviewed Andrew Vaughan, manager of Free Spirit Fund, in the Money & Markets podcast. You can listen to that interview here:

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Issue Date: 25 Sep 2020