e-fundresearch: Which benchmark do you adhere to?
Nicholson: The fund is measured against the FTSE Developed Europe Small Cap benchmark.
e-fundresearch: Are you also responsible for other funds at the moment?
Nicholson: I spend most of my time managing the European Smaller Companies Fund but also manage two institutional UK Small Cap funds.
e-fundresearch: What is the total volume that you manage in all your funds?
Nicholson: It is currently around €200m but this is growing all the time and we have a €50m new client funding in August.
e-fundresearch: Regarding the performance: which performance did you achieve since the beginning of the year and in the years 2003-2008? Absolutely and relatively to the relevant benchmark?
Nicholson: The fund has produced top decile performance over one and two years and is ranked 28th percentile year to date (Source: Morningstar, all figures to 30.06.10). The fund has also outperformed its benchmark by 0.9% year to date, 5.7% over one year and 17.1% over two years, producing absolute returns of 6.1%, 37.5% and 10.2% respectively (Source: Standard Life Investments, all figures cumulative to 30.06.10).
e-fundresearch: How content are you with your own performance in the last years and this year?
Nicholson: The fund has outperformed strongly against both its benchmark and its peer group. Nevertheless, I am my own harshest critic and still feel there is room for improvement despite the challenging market environment.
e-fundresearch: How are you able to deliver added value for your investors with your performance?
Nicholson: I am fortunate enough to be part of a very strong team with a lot of experience. We utilise a clearly defined, in-house small cap investment process which has generated a consistent track record of performance over the last 15 years.
e-fundresearch: How long have you been a fund manager already?
Nicholson: I have over 20 years investment industry experience and have been managing funds for 15 years of that time, with the last ten years spent at Standard Life Investments.
e-fundresearch: What were your biggest successes and your biggest disappointments in your career as fund manager?
Nicholson: My biggest success has been my involvement in developing and launching this exciting new European Small Cap fund. My biggest disappointment would be that fund is still relatively small, currently sitting at around €50m, despite its strong track record of outperformance.
e-fundresearch: What kind of capital market situation do we have at the moment? How do you act in this environment?
Nicholson: We still have a market characterised by fear, mainly fear of a double dip and fear of sovereign risks in Europe. However, I see European small caps as offering excellent value and many of my portfolio holdings are trading extremely strongly. This is key to the small cap investing hypothesis: namely, that good smaller companies can grow regardless of the market or economic cycle.
e-fundresearch: What are the special challenges in this environment?
Nicholson: The challenge is the same as the opportunity - extreme volatility. However, with a clear process and discipline we can help our clients outperform and achieve their investment objectives.
e-fundresearch: What objectives do you have till the end of the year and in the mid term for the upcoming 3 to 5 years?
Nicholson: The stated objective of the fund is to outperform its benchmark and be in the top quartile of the peer group. We´ve achieved that so far but I´d be disappointed if we didn´t see decent double digit absolute returns over the next three to five years given the outlook for profits recovery and current reasonable valuations.
e-fundresearch: Do you model yourself on someone? Any ideals?
Nicholson: I´ve been lucky enough to work with a number of excellent fund managers and hope that I´ve learnt a little bit from all of them.
e-fundresearch: What motivates you in your job?
Nicholson: My job is one of the best jobs you could have. It is interesting, intellectually challenging and no day is ever the same. I´m also extremely competitive so it’s important to me that I achieve my clients´ investment objectives.
e-fundresearch: What else do you want to achieve or do you have any further aims as a fund manager?
Nicholson: My ambition is to develop the European Smaller Companies Fund into a €500m product, winning more clients and generating higher returns for them.
e-fundresearch: What other profession would you have taken interest in, apart from becoming a fund manager?
Nicholson: It is very hard to think of anything that would have given me the same level of satisfaction and enjoyment.
e-fundresearch: Thank you for the interview!
