Miton UK MicroCap Trust plc (LON:MINI) has announced its Factsheet for Setpember 2024 is now available.
Manager Commentary
Global governments have become more nationalistic over recent years. This has ushered in a period of renewed geopolitical tensions, and potentially more intermittent market liquidity – the extent to which shares can be bought and sold quickly at stable prices. Reduced market liquidity would make it harder for listed companies to raise additional capital.
We believe this change in pattern is now starting to favour shares in companies listed on a stock exchange in the UK over shares in big US technology companies listed in America. We could see some UK-listed companies expand into markets vacated by other firms going out of business. Others could acquire insolvent companies relatively cheaply and debt-free as part of the administration process.
We believe these sorts of deals are more significant for smaller companies. Over the last few years, the trust’s Net Asset Value has been decreasing as local institutions withdraw investments from the UK. In addition, Autumn Budget uncertainty may have held back the returns of the trust further during September. At the periodic redemption point, around 40% of shareholders have requested a redemption.
Interestingly, in recent months, investment allocations have started to broaden into smaller quoted companies. At this stage, this favourable pattern hasn’t been reflected in the AIM market, given uncertainty over the Budget. But beyond the Budget, we believe the smallest listed firms in the UK could have a performance catch-up with the trust’s returns improving. Even tiny improvements in the amount of money invested in the UK’s smallest companies can sometimes move their share prices up disproportionately.
We are very upbeat about the prospects for the trust.
Gervais Williams & Martin Turner 30.09.2024
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.
