Speaker · Updated
Simon Evan-Cook: latest market views
Downing Fund Managers
Summary
Simon Evan-Cook is a multi-asset fund-of-funds manager at Downing Fund Managers who leads the Downing Fox fund range, a Citywire columnist, and formerly an award-winning manager at Premier Miton.
Chorus has 9 views from Simon Evan-Cook across 3 episodes on Merryn Talks Money since October 19, 2026. Their latest calls: bullish on Neuberger Berman Group; bearish on NVIDIA.
Where they stand
Their latest bullish or bearish call on each company.
- Neuberger Berman GroupBullish ·
- NVIDIABearish ·
What they talk about most
The latest views
Newest first. Every quote is checked against the episode's transcript.
Good active managers are moving into cheap small and mid-cap stocks away from the concentrated mega-caps.
Evan-Cook argues that index concentration in the biggest companies has created opportunities away from them. Investors in smaller and mid-cap businesses have spent years watching large companies rise while theirs lagged, and those smaller businesses are now significantly cheaper than the big ones. The best active managers, willing to back their own views, are moving into these areas, where he sees strong companies at cheap valuations. He ties this to fund-manager discipline: buying quality companies at prices that make sense relative to their value.
“They are moving towards these smaller and mid cap areas where you've got amazing companies at cheap valuations.”at 24:12
Market sentiment, positioning & volatility
Passive inflows push up prices regardless of valuation, weakening the capitalist case for the stock market.
Evan-Cook argues that money entering the market through passive funds is not concerned about what it buys. It pushes up the prices of whatever is in the index, whether those stocks are cheap or expensive and possibly overvalued. Passive investing started as a small part of the market, and Jack Bogle said it works only when most investors make active decisions. Evan-Cook says passive flows now drive the market, so the question is who is driving it. He argues that when no one looks at balance sheets, debt or management quality, the case for capitalism, which the stock market is supposed to embody, is weakened.
“If you've got money coming into the market and it is not particularly worried about what it's buying, it will push up the price of the things that it's buying. And that's regardless of whether these things are cheap and worth buying or expensive and possibly overvalued.”at 14:29
Asset managers, brokers & exchanges
Small, new funds tend to outperform early on because they are nimble and managers are hungry, but rising fixed costs deter launches.
Simon argues that large funds usually became large because they performed exceptionally in their early years. Small funds can buy smaller companies, which large funds cannot, and the smaller-company market is less efficient, so managers can find overlooked companies that grow many times over. New funds run by either younger, hungry managers or experienced managers breaking away from red tape and risk departments often do well early on. Once a fund grows, its CEO starts to care and pushes for benchmark-hugging, which can restrain style. Fixed costs of running funds have become more onerous, so a fund now needs more money to be viable, which he regards as a shame and a barrier to new entrants.
“those big funds only really got big because in their early years, they smashed it out of the park.”at 3:35
NVIDIABearish
Nvidia is amazing but cannot grow 50 times from here, so mega-cap growth returns are limited.
Simon contrasts small companies, which can grow 10, 20 or even 50 times, with Nvidia, which he calls amazing but says cannot grow 50 times from here. He says the maths is impossible. The argument is that mega-cap AI leaders have limited upside from current levels, which supports the case for small caps.
“Whereas, obviously, a company like NVIDIA, amazing as it is, shouldn't be able to grow by 50 times from here.”at 4:40
US mega-cap growth has exhausted its return potential; small caps can deliver inflation plus 5-7% nominal.
Simon cites Research Affiliates' forward-return work, which uses valuations to infer expected returns in a similar way to weather forecasting. US mega-cap growth, which did best over the last 10 to 15 years, has used up its potential return because valuations are so high. European, UK and US small caps have not over-delivered but have delivered sustainable returns, and there is no reason they cannot keep delivering inflation plus 5-7%, which is roughly 9-11% nominal. A good fund manager could add one or two points. This gives asset allocators a respectable alternative when equities look expensive and bonds look compromised.
“there's no reason to think that over the next ten years that they can't keep delivering you inflation plus five, six, 7%.”at 21:10
UK small-cap value has been the best long-run asset class since 1955, and great managers can add to that.
Simon agrees with a value explanation for the small-cap effect and cites Dimson and Marsh data for the UK back to 1955. The best asset class over that period is small-cap value, which he has seen in his own career. He says a talented manager in that segment is worth holding on to, and gives Alex Wright's Fidelity UK Smaller Companies Fund as an example, which was the best UK fund over ten years of his management because of market inefficiencies and skill.
“the very best asset class you can be in is small cap value. And I've certainly seen that in my time, small cap value over long periods smokes everything else.”at 22:54
UK small caps stay downtrodden despite M&A; they should rebound once active UK funds finish selling.
UK small caps are seeing M&A activity but still trade poorly because peer active UK equity funds have been selling the small caps they hold. Simon argues that once the last of those funds has sold, very little should be needed to reverse the move, so the group should start rising.
“the market is still downtrodden, and that's because of the peers on my side of the fence who have been busy selling their UK equity, active UK equity funds that hold the small caps. And at some point, the last one of those will have left.”at 35:31
Neuberger Berman GroupBullish
Neuberger Berman's emerging market value managers are exceptional; their fund rose during the AI sell-off.
Simon's firm has bought the emerging market value fund run by Juan Torres and Vera German at Neuberger Berman. It was one of a handful of funds that rose while the market fell during the AI sell-off in July. Simon takes this as evidence the fund delivers when it is needed, which is why he calls the managers exceptional.
“Juan Torres and Vera German, who are exceptional emerging market value fund managers. We were lucky enough to get into their fund in July when they were one of a handful of funds that went up when the market was being dragged down by the AI”at 37:26
A rotation out of concentrated AI stocks into neglected value stocks can happen without an economic crash.
Simon points to 2000, when market concentration was similar. UK funds, mostly equity income funds with valuation discipline, bought boring companies whose prices rose as tech sold off, and about 50 such UK funds rose in that bear market. He argues that if the sell-off is a pure rotation rather than an economic event, a war or something worse, there is no reason money cannot move from the concentrated AI stocks into the neglected parts of the market.
“So if it's purely a rotation rather than economic event or a war or something worse, there's no reason, I think, that movement of money out of the massive concentration in AI stocks into all the stuff that's been neglected for three years can't happen as well.”at 39:25
Shows
- Merryn Talks Money · 3 episodes
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