St. James’s Place (SJP) has announced it is switching to a multi-manager approach for its £1.9bn Global Smaller Companies fund.

The firm has added six new external fund managers to the fund as part of the transition.

EdgePoint, Select, MAC Alpha, Kabouter, LSV and Kopernik have been selected to manage the fund alongside the existing manager, Northern Trust Asset Management.

SJP stated that each manager was selected based on their investment approach, role within the portfolio, and ability to generate excess returns in complimentary manner.

The new line up seeks to combine active, differentiated managers with the existing beta strategy, in an effort to better navigate market cycles.

SJP outlined the approaches each manager will undertake, with Northern Trust Asset Management’s role being a diversified 'quality minus junk' systematic strategy, while MAC Alpha is an international small cap-focused intrinsic value manager that will apply a long-term, research-driven approach to an ‘inefficient part’ of the market.

Kabouter is an international small cap manager that will seek out undiscovered companies to unlock value, LSV is a global small and micro-cap systematic value strategy that will look to provide active exposure to structurally attractive micro-cap value stocks, and Select is a US small-cap specialist that focuses on high-quality growth names in the US small-cap space.

Finally, EdgePoint is a global SMID cap strategy that seeks out proprietary insights not reflected in current market prices and Kopernik is a global all-cap strategy that provides differentiating exposures to the overall fund.

The switch to a new approach follows SJP upgrading its global asset allocation view on smaller companies from neutral to positive in December.

SJP said this decision was primarily driven by historically low relative valuations following a period of underperformance, and the diversification benefits they provide in an “increasingly concentrated” global equity market.

As a result of this, allocations to global small-cap stocks were increased across SJP’s Polaris range and model portfolios.

“The blend of seven managers follows an extensive research process amongst hundreds of candidates,” stated SJP investment research director, Joe Wiggins.

“The managers have been selected to provide a diverse range of complementary investment styles, giving clients in the fund a diverse exposure to the small cap universe.

“Small caps across regions are the cheapest they have been relative to large caps in recent history, providing an attractive entry point for investors.

“A modest overweight to global small-cap equities, particularly within a well-constructed, actively managed multi-manager approach, is a compelling allocation for investors looking to capitalise on these long-term opportunities.”

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