Scotland's leading fund managers

HARRY Nimmo, who runs Standard Life's £270m UK Smaller Companies fund, has topped The Herald's table of the best-performing investment managers working for Scottish players for a third consecutive month.

Nimmo held top position comfortably when investment performances for the three years to December 31 were compiled by financial publisher Citywire.

He was in fourth position UK-wide for a third consecutive month.

Nimmo told The Herald that Aveva, which develops engineering design software used in construction of the likes of petrochemical and energy plants, had made the biggest single contribution to performance during the fourth quarter of last year.

As well as being the largest contributor to the portfolio, a calculation which takes account of the fact it is the second-biggest holding, Aveva was also the stock in the fund to enjoy the best individual share price performance. Nimmo said it was up 54% in absolute terms during the fourth quarter alone.

He added that the second-largest overall contributor to the portfolio in the fourth quarter had been self-storage group Big Yellow. Business information provider Datamonitor, the biggest holding in the portfolio, was next in terms of contribution.

Nimmo has highlighted the fact that his fund's investment approach, one of being willing to pay up for good quality growth stocks, had been less well suited to the early part of the recovery of the stock market from the low points hit around the time of the Iraq war in March 2003. However, it has delivered impressive returns in recent times.

Nimmo said his fund had made a total return, including dividends paid by its holdings, of 43.5% in 2006. He contrasted this with a 23.5% average for smaller companies funds.

The total return on his fund's benchmark, the Hoare Govett UK Smaller Companies Index (excluding investment trusts), was only 28% during 2006.

In the fourth quarter, the total return on his fund was 17.9% and the benchmark index could only manage 13.1%.

Nimmo continues to "like" software and restaurant stocks.

He pointed out about 9% of his fund was currently invested in restaurants. Holdings include Carluccio's, Restaurant Group, Caffé Nero, and Domino's Pizza.

Aside from Aveva, software holdings include Royalblue Group, Detica, and Autonomy.

The Citywire survey focuses on open-ended funds aimed at retail investors.

It does not cover managers of investment trusts or funds for which the minimum initial investment is more than £10,000. Rankings are based on three-year, risk-adjusted performance against relevant benchmarks.

Fewer than one-fifth of fund managers in the UK qualify for one of the 193 Citywire ratings.

Barry Norris, who runs Resolution Asset Management's European Alpha fund, rose from third to second place in the Scottish top flight when the latest performance figures were tallied.

His UK-wide ranking improved slightly from 12th to 11th.

Kenneth Barker, a past Scottish leader who runs the Baillie Gifford Corporate Bond and High Yield Bond funds, got closer to the action again. He jumped from sixth to third spot in the Scottish top flight as his UK-wide ranking improved from 17th to 14th. Nimmo's colleague, Mark Niznik, rose from seventh to sixth in the Scottish league as his UK-wide ranking improved from 27th to 18th.

Niznik runs Standard Life Investments' £350m UK Opportunities fund.

Daniel Nickols, who runs the Old Mutual UK Select Smaller Companies fund, was top performer UK-wide again when rankings were compiled.

Artemis remained the Scottish investment house with the greatest number of Citywire-rated managers. It has seven - putting it just ahead of Standard Life Investments on six.