Advertorial feature
the current problems with small cap
investment will partially recede.
Can active fund managers
beat the index?
In this snippet from the latest episode of Trust TV, Job Curtis discusses active
vs passive investment strategies and the future of the UK equity market.
These are the views of the author at the time of publication and may differ
from the views of other individuals/teams at Janus Henderson Investors.
Any securities, funds, sectors and indices mentioned within this article do
not constitute or form part of any offer or solicitation to buy or sell them.
Past performance is not a guide to future performance. The value of an
investment and the income from it can fall as well as rise and you may not
get back the amount originally invested.
The information in this article does not qualify as an investment
recommendation.
For promotional purposes.
Advantage investment trusts
Mid-cap companies are not suffering
the same problem, so takeover
activity by larger established
companies is likely to be a feature of
2020. However, the current concerns
over liquidity are an opportunity for
funds with a mandate to invest in
genuine small companies.
It is closed-ended funds that are best
suited to these mandates because they
do not have to meet redemptions in
the same way that open-ended funds
do, meaning a trust will not become
a forced seller in times of stress. This
is why the Henderson Opportunities
Trust portfolio has more than
60% invested in AIM (alternative
investment market) stocks.
The premium investors are paying for
liquidity has expanded significantly.
However, the earnings and dividend
growth of large companies in comparison
to the small companies is unlikely to
justify this premium valuation.
Smaller companies are often tied
30 / 31
Many UK small domestic
companies have been
focusing on cost-savings,
so when sales growth
increases on this disciplined
low cost-base, operating
profit margins will expand
more closely to the fortunes of the
UK economy. The UK has been
subdued as a result of the consumer
drawing back and corporates putting
spending plans on hold. These plans
cannot be deferred indefinitely and
a replacement cycle will start up
with capital investment injecting
momentum into economic growth.
Many UK small domestic companies
have been focusing on cost-savings,
so when sales growth increases
on this disciplined low cost-base,
operating profit margins will expand.
The drop-through of increased sales
to profits usually surprises as an
economy grows. The analyst upgrades
will follow and this is the catalyst that
will prompt investors to move money
into UK shares in an unloved sector.
These are the views of the author at the time of publication and may differ from the views of other individuals/
teams at Janus Henderson Investors. Any securities, funds, sectors and indices mentioned within this article do not
constitute or form part of any offer or solicitation to buy or sell them.
Past performance is not a guide to future performance. The value of an investment and the income from it can fall as
well as rise and you may not get back the amount originally invested.
The information in this article does not qualify as an investment recommendation.
For promotional purposes.
trustnet.com