Miton UK MicroCap Trust plc (LON:MINI) has announced its Factsheet for the month ended 31 January 2024.
Manager commentary
One of the key advantages of the Miton UK MicroCap Trust’s widely diversified mix of micro-cap holdings
is that in our view it can invest in stocks with much greater potential than the companies in the main stock market indices. Some portfolio holdings have a degree of maturity but alongside there are others
that are much less mature. Many have sales and earnings principally overseas, along with others that are skewed domestically. Some are market leaders in a specialist industry sector whilst others are expanding into a novel area.
Global stock markets have risen over recent months, as investors are cheered that the global economy
appears to have dodged a recession. Whilst this is reassuring, we worry that the ongoing reshoring of supply lines will add to inflationary pressures. In addition, the fragmentation of global trading relationships makes it harder for businesses to plan and hence invest for the future.
These trends may compromise global growth potential in the future. There were similar headwinds
between 1965 and 1985, when inflationary pressures and recessions were persistent. During these years,
companies generating cash surpluses, such as companies paying an income that were listed in the UK, outperformed most international comparatives. More importantly, UK-quoted micro-caps greatly outperformed the UK large companies, and hence at the time they were one of the best performing parts
of one of the best performing stock markets globally.
Whilst a micro-cap portfolio. like that of the Miton UK MicroCap Trust, has long-term advantages, its fluctuations in share price are often relatively uncorrelated with those of the companies in the main stock market indices. This has led to Trust’s return falling behind others over the last two or three years, although importantly most of the underlying businesses continue to trade as anticipated. Market trends do evolve, and in time, the Trust’s holdings should justify higher valuations.
Gervais Williams & Martin Turner
31.01.2024
Miton UK MicroCap Trust (LON:MINI) intends to invest primarily in the smallest companies, measured by their market capitalisation and quoted or traded on an exchange in the United Kingdom.
