Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Miton UK MicroCap. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
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Overview

Miton UK MicroCap Trust (MINI) was launched in 2015 and invests predominantly in a portfolio of smaller UK companies, typically with a market capitalisation below £150 million.

The managers, Gervais Williams and Martin Turner, argue that the growth potential of smaller companies is less dependent on general economic conditions than larger companies’; their view being that smaller companies often have strong growth potential regardless of whether they operate in a market that is contracting overall. This advantage, they say, potentially unrecognised by some investors, has resulted in the micro-cap sector considerably outperforming the FTSE All-Share Index. Since 1955, when the data was first collected, the FTSE AIM index has outperformed the FTSE All-Share Index by an average of 5% per annum.

Gervais and Martin aim to add alpha within the micro-cap universe, by looking for overlooked stocks with a disproportionate upside if they succeed. This strategy means that there is a diverse portfolio of companies operating in different niches. The approach has a relatively high turnover, with gains continually being reinvested in other potential ‘winners to come’.

Since the trust was established MINI’s most significant outperformance, relative to peers, has occurred in the last year, boosted by a variety of single stock successes: including in the healthcare, technology and climate change arenas. The trust has been the strongest performing one in the AIC UK Smaller Companies sector over the past six months and year, also dramatically outperforming the open-ended sector. This outperformance has not been translated to recognition by the market, however, and the trust trades at around a 13% discount.

Kepler View

We see MINI as an excellent vehicle for investors who are looking to increase their exposure to an uncertain UK recovery, which has potential pitfalls along the way. Due to the size of the companies in the portfolio, and the secular growth stories that many take part in it, the performance of the trust shouldn’t be so reliant on the wider economy; the companies should be be in a better position whether we see a fast and strong rebound or not. In addition we note that the discount has not responded yet to the much improved performance over the past twelve months and, with an annual tender offer provision protecting the discount to the downside, this juncture could prove to be an excellent entry point.

MINI is also a diversifier to the typical UK investors’ equity portfolio, with the AIM sector being significantly different in its composition compared with the FTSE 100 and FTSE 250 indices. There is a much greater exposure to the high growth areas of IT and healthcare, which are doing extremely well in the post-COVID environment – the FTSE All Share for example, has just 1.25% in technology. Furthermore there are considerably more quoted companies in the UK with a market cap less than £150m than above it, including a variety of idiosyncratic opportunities than can’t be found elsewhere. The wide variety of secular growth opportunities offers the potential for long-term returns with the right stock-picking.

bull bear
Turnaround in performance over the past year High OCF
Attractive discount relative to peers, despite improved performance Relatively illiquid underlying holdings
Offers diversification to mainstream UK equity funds Relatively broad spread
Continue to Portfolio

Fund History

30 Dec 2021 Fund Analysis
Specialising in the very smallest UK listed companies, MINI can provide a differentiated source of growth…
30 Dec 2021 Great expectations
As the last of the mince pies wilts in the fridge, topped with a generous helping of stilton, the Kepler Trust Intelligence team stick a finger in the air and point toward their top picks for the year ahead…
03 Nov 2021 Don't fear the reaper
With market direction hard to call, we consider the case for taking a long-term view in the investment trust sector…
29 Sep 2021 Slings and arrows
Our analysts argue over whether it’s better to take arms against volatility in a portfolio, or to simply suffer it…
11 Aug 2021 In at the deep end
Does seeking out wider-than-usual discounts help investors systematically outperform in the UK trust space?
30 Jun 2021 Inflation – a real threat or hot air?
Two of our analysts ask whether recent high inflation numbers indicate something long-lasting and troubling is happening…
05 May 2021 Vive la revolution
For thirty years quality has had a structural tailwind; but revolt is in the air and value is on the barricades…
07 Apr 2021 Fund Analysis
After an exceptional 2020, MINI may yet have further to go…
24 Mar 2021 Shoot to Thrill: ISA targets for long term growth
We all intend to invest for the long-term but can often be distracted by the news...
10 Feb 2021 Eye of the Pfizer
Mining shares have rallied in recent months. With further potential, what impact could this have on the relative returns of active UK Small cap strategies...
14 Oct 2020 Fund Analysis
MINI is the strongest performing UK Smaller companies trust in 2020…
06 May 2020 The fight in the dog
We look at the characteristics which have separated the winners from the losers among small-cap trusts in the current crisis, with some surprising results...
05 May 2020 Large vs small
Equity markets are pricing in continued large-cap outperformance. Will this continue?
30 Apr 2020 Talking Trusts - Gervais Williams, Miton UK MicroCap
Earlier this month, we hosted a webinar and live Q&A with Gervais Williams - watch the video and hear the audio here...
02 Oct 2019 Fund Analysis
Based around a clear macroeconomic view, MINI offers investors exposure to some of the most exciting opportunities within the UK…
11 Sep 2019 Nanny knows best: how regulation is influencing returns
New research suggests disruption is threatened by increased regulation, with clear consequences for investment strategists...
04 Jul 2019 An industry icon
Stalwart of the investment trust sector Gervais Williams explains how a three decade history with trusts has informed his thinking...
19 Feb 2019 Fund Analysis
Miton UK MicroCap is quickly becoming one of the most attractive vehicles to the UK small cap market...
12 Sep 2018 High flyers
Our research shows small-cap managers adding consistently more alpha, and regulatory change means this could be an attractive time to invest in the sector...
11 Sep 2018 Fund Analysis
Run by Gervais Williams and Martin Turner, Miton UK Micro Cap is a £102m investment trust that invests in the smallest companies in the UK...
19 Jun 2018 Pretty little things
Many smaller companies managers have been shifting into micro caps in 2018, should investors be following suit?
View all

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