We look on “Quality” stocks as being those which offer the best combination of returns, margins and cash flow and pick the “best” 25 companies from our universe of about 500 stocks with a market cap in the range of approximately £25-410m. In the period since the last refresh on 24 October 2017 the quality style screen performed very strongly, outperforming the small-cap and microcap indices by c.1600bps and 1300bps respectively. In fact performance of this screen has been very strong since inception in February 2017, albeit with some short spells of volatility concurrent with the market. While the screen has yet to be tested in a concerted market downturn, we have increasing confidence that quality style characteristics applied to small companies lead to out-performance in sideways and rising markets.

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