FT Adviser – Best performing UK smaller companies fund over the past 12 months

David Thorpe, FT Adviser Investments, writes about Gresham House Strategic plc:

Small UK equity trust thrashing big name rivals revealed

A £44m market cap investment trust has outperformed the giants of the investment world to be the best performing UK smaller companies fund of the past 12 months.

Data compiled by FTAdviser shows the Gresham House Strategic investment trust has outperformed all 48 open ended funds in the IA UK Smaller Companies sector and the 17 other investment trusts in the AIC UK Smaller Companies sector over the past year to 23 November.

The Gresham House trust has returned 18.3 per cent in 12 months, while the average trust lost 6.5 per cent.

The sector average for the relevant open ended fund is a net loss of 4 per cent.

The best performing open-ended smaller company fund, the £180m Marlborough Nano Cap Growth fund, returned 10 per cent during the period in question.

Gresham House Strategic trades at a 26 per cent discount to its net assets, which is the largest such discount in the sector.

The managers of the fund aim to invest in shares that have little exposure to the wider economic cycle, and so may offer more defensive characteristics than other small cap funds.

A spokesman for the investment trust stated it seeks to deploy private equity investment styles to listed companies, and such a strategy tends to perform well when markets are choppy, aiding the present bout of strong performance.

Darius McDermott, managing director at Chelsea Financial Services, said his favourite UK small cap funds is Livingbridge UK MicroCap for growth focused investors and Montanaro Income for income focused investors.

He said: “There are a number of larger funds in the small cap area that we respect, but in the post Mifid-world mid and small cap funds have the opportunity, because there is less research around, to outperform, and smaller specialist funds can do that, looking at the data shows the potential to find such hidden gems.”Last month, the Investment Association reported investors have withdrawn £10bn from UK equity funds since the Brexit vote in June 2016.

Investor outflows from all equity sectors amounted to £308m in August, while the IA Global sector had inflows of £417m during the month.

UK-focused funds saw another £423m being withdrawn from the sector.

The cash taken out of equities appeared to have been deployed into mixed asset and absolute return funds during the month.

In total, £539m of net inflows went into the mixed investment sectors, while £36m went into funds categorised as “other” which includes absolute return funds.

26 November 2018


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