Miton UK MicroCap Trust plc (LON:MINI) has announced its Factsheet for the month ended 31 October 2023:
Over the year to date, in the absence of a global recession, passive strategies, where investors buy securities that mirror stock market indexes, have continued to deliver, with both US technology companies and the largest US companies typically leading the pack. In contrast, as few active managers
hold the largest companies, most have continued to underperform. The net effect is that market sentiment for companies outside of the mainstream indices (ie the medium and small sized companies)
has been progressively weaker over the year.
What are the implications for the future? Many investors currently look forward to the inflationary
pressures passing, early cuts in US interest rates and the prior market trends returning. Whilst this may
occur, we note that geopolitical relationships are fragmenting beyond globalisation, which implies that the investment behaviours to date may be about to change radically. In our view, companies generating cash surpluses should have major advantages at a time when many are struggling with extra interest payments, and increasingly price conscious customers. The Trust invests in UK small and micro-cap companies which can generate cash surpluses and we believe are well placed for unsettled economic conditions.
In our view, even a modest turnaround in the flow of money into UK funds could precipitate a disproportionate rise in UK company share prices. Were that to occur, then we believe the greatest potential lies with small companies listed on the London Stock Exchange, as their potential is amplified by the catch-up from their underperformance over the last two years.
These factors should be favourable for the Miton UK MicroCap Trust strategy. It has a focus on UK listed
companies with a bias towards stocks that are set to generate cash surpluses and is a micro-cap portfolio
