Rob Kingsbury spoke to Dowgate Wealth’s Mark Chadwick and Will Searle about the investment boutique’s investment style and its two fund offerings, both reaching their one year anniversary in March 2023.
Mark Chadwick, CEO and fund manager
Will Searle, fund manager
Dowgate Wealth was set up by Mark Chadwick, in partnership with Dowgate Capital, in 2020. Formerly of Hargreave Hale (latterly Canaccord) Chadwick cut his fund management teeth working alongside Giles Hargreave on his UK Smaller companies funds.
Dowgate Wealth was established initially to run private client money but, looking to bring further scale to the business in 2022, the company launched two funds, the UK Small Cap Growth Fund and the European Growth fund, which are open to the market.
The UK Small Cap Growth Fund, launched on 14 March 2022, run by CEO and fund manager Chadwick, invests in companies with a market cap of up to £1.9bn, with the average in the fund standing around £693m.
The European Growth fund, launched on 21 March 2022 and run by Searle, is a multi-cap fund with a small cap bias.
The firm operates a collegiate structure and a share and remuneration package “which means everyone has skin in the game,” Chadwick says.
Both funds research bottom-up, looking at individual companies and agnostic to index benchmarks. They can conduct up to 60 interviews with company management a month, seeing the companies they have invested in at least every six months. Chadwick says he prefers face-to-face meetings in this under-researched market, as a means to get to know the management team better, understand their business model, their culture and how they can deliver profitable and sustainable future growth. As with his own team, Chadwick prefers management who have skin in the game.
“By the second or third meeting you get a real feel for the management team, their strategies and the potential of the company. It’s no longer about powerpoint presentations, you can sit down and have a good discussion with management about the company. ”
Both teams are looking for quality stocks at reasonable prices. There is no particular style of investing, e.g. value or growth, as Chadwick believes following a style restricts the funds’ opportunities.
Looking at 2023, both Chadwick and Searle believe we are now in stock pickers market. Chadwick predicts there is “still pain to come” in the market, potentially around Q3, after the markets readjust following the better start to the year than 2022.
Ukraine is still the elephant in the room. While not expecting a resolution to the conflict in 2023, when it does come, “markets are going to rally” and smaller companies have been shown to benefit from as much as a 36% uplift following similar periods of market uncertainty, Chadwick says.
Europe, while unloved by many as a market today, offers plenty of opportunity for stock pickers, Searle says. In particular for companies whose revenue is not solely derived from the Continent. He also likes companies operated by families & founders, as they are often valued at a discount to peers in other regions. In addition, he points out that the energy issues caused by the war are being resolved, which bodes well for the future.
