UK small-cap funds have had a tough time of it in the recent past. Many portfolios took a battering a couple of years ago, and as we noted in our latest monthly investment trust newsletter this week, plenty of closed-ended trusts with a UK small-cap focus have a low market capitalisation and trade on a big share price discount to net asset value (NAV), leaving them vulnerable to consolidation (see below for details of how to sign up for our investment trust newsletter).
And yet a comeback of sorts is already under way. Base rates are falling, the economy looks steadier and some small-cap funds have been able to post rich returns once again in the near term.
As is often the case, it’s the investment trusts that seem to have registered the biggest gains. The latest results for JPMorgan UK Small Cap Growth & Income (JUGI), published earlier this month, note that it made a NAV return of more than 28 per cent over the 12 months to 31 July, versus 13.2 per cent for the Deutsche Numis Smaller Companies plus Aim (ex investment companies) index. As of late October, shareholders are sitting on a 17.5 per cent return for 2024, compared with around 6 per cent for the index.
