INVESTMENT STRATEGY
SMALL CAPS
have the stomach for volatility, but
patience should be rewarded,” he
said. “However, make no mistake –
this is a long-term investment.”
Urquhart adds: “While small caps
are a bit higher risk, by holding
them you are gaining the potential
for stronger growth, as it is arguably
easier for these companies to grow
“INVESTING IN SMALL
CAPS IS TOWARDS THE
VERY TOP END OF THE
RISK SPECTRUM”
their revenues and profits than
larger companies. Small caps are
also less affected by the wider macro
issues that the larger companies
face.”
“While the sector is not
particularly cheap at the moment,
it remains attractive on a longterm view.”
PERFORMANCE OF TRUST OVER 5YRS
350%
Investment trusts from Schroders
For UK investors, home shores can form the bedrock of
an investment portfolio.
That’s why you’ll find some of our most senior
investment talent at the helm of our longstanding UK
investment trusts. Our managers bring an average of 26
years’ industry experience to managing the trusts. So if
skilled hands are important on your investment voyage,
make Schroders your first port of call.
GVQ Strategic Equity Capital plc (345.87%)
300%
250%
200%
There are three trusts in the Schroders UK range:
Schroder UK Mid Cap Fund plc, investing in
medium-sized companies; Schroder Income Growth
Fund plc, aiming to provide both income and growth,
and Schroder UK Growth Fund plc, which seeks to
capitalise on the growth potential of UK companies.
150%
100%
50%
00%
Mar 15
Sep
Mar 14
Sep
Mar 13
Sep
Mar 12
Sep
Mar 11
-50%
Sep 10
by more specialist vehicles. He says
he recently looked at the Miton UK
MicroCap and River & Mercentile
UK Micro Cap funds as he likes the
asset class and the managers, but
in the end he opted for an openended fund, Wood Street Microcap
Investment.
“Investing in small caps is
towards the very top end of the
risk spectrum; therefore one must
Expertly
navigating the UK
Source: FE Analytics
THE TOP DOG: STRATEGIC EQUITY CAPITAL
Given that Strategic Equity Capital is top of the AIC UK Smaller Companies sector over one, three and five years, it
is hardly a surprise it is one of the two trusts in its peer group currently trading at a premium to net asset value. On a
share price basis, it has made 48.08, 187.01 and 345.87 per cent over these respective periods, compared with returns
of 15.14, 79.02 and 133.15 per cent from its sector. The trust has the maximum five crown-rating from FE and its
current 7.3 per cent premium to NAV is the highest in the peer group.
As with any investment, investment trusts carry risk. The
value of an investment trust will rise and fall in value, and
you may not get back what you put in. As these trusts
concentrate on only the UK, they can carry more risks
than those trusts that are spread across a number
of regions.
Whether your focus is growth, income or a combination,
our deep knowledge of the UK can help you chart the
right course. Talk to your financial adviser or visit
schroders.co.uk/its
THE NEWCOMER: MITON UK MICROCAP
This trust is already trading at a 6.4 per cent premium to NAV despite the fact it only launched in April this year. It is
suggested it will only be allowed to grow to a maximum of £250m. Urquhart says: “Williams and Turner are highly
regarded fund managers who have long trumpeted the attractions of the UK’s smallest companies. It is still early days
in this fund’s life, although in our opinion the investment trust structure does have the potential to add real value.”
Urquhart adds that in Winterflood’s view, micro cap exposure can also be considered as complementary to more
mainstream UK smaller companies funds.
THE DISCOUNT PLAY: JP MORGAN SMALLER COS
This trust is managed by Georgina Brittain, who also runs the JP Morgan Mid Cap IT. JP Morgan UK Smaller Cos is
currently sitting on a 15.69 per cent discount to NAV; however, it has returned 22.4, 91.74 and 152.9 per cent over one,
three and five years respectively, beating its peers over every time frame. Brittain’s investment strategy is defined by a
focus on valuations, momentum and quality. In addition, while she views investment trusts as a great structure, she
does not subscribe to the theory that they necessarily allow fund managers different time horizons as to which they
invest over their open-ended peers.
20
trustnetdirect.com
Investing for
your world
Fund manager industry experience: Rosemary Banyard: 36 years, Andrew Brough: 28 years, Sue Noffke: 25 years and Philip Matthews: 16 years. The most up to date
key features can be viewed on the UK Investor website via www.schroders