Liontrust UK Micro Cap Fund

The Liontrust UK Micro Cap Fund returned 2.5%* in January. The FTSE Small Cap (excluding investment trusts) Index and the FTSE AIM All-Share Index comparator benchmarks returned 1.6% and 0.4% respectively. The average return of funds in the IA UK Smaller Companies sector, also a comparator benchmark, was 0.6%.

The vaccine roll-out continued apace in the UK, and there was some evidence emerging by the end of the month that cases of the virus had peaked. Given the threat from different variants of the virus, Prime Minister Johnson refrained from setting out a set timetable for the reopening of the economy but the speed of the vaccination programme gave investors reasons to be optimistic.

For the Fund, the focus was on a spate of company updates which highlighted how the pandemic has affected trading. Attraqt Group (+21%) has seen significant and sustained increase in volume since the onset of the Covid-19 crisis. During the year, the company – which provides online search solutions for e-commerce companies – signed 38 multi-year contract renewals, compared to 21 in 2019. It stated that revenue and earnings before interest, taxes, depreciation and amortisation (EBITDA) are both expected to rise in line with market expectations.

Science Group (+14%), meanwhile, indicated that its full-year adjusted operating profit will come in ahead of previously upgraded guidance of £10m. Revenue is expected to be £73m, representing a 28% increase from the previous year. The consultancy group also noted strong cash levels and indicated that it would explore strategic acquisition opportunities.

accesso Technology Group (-12%) ended the month lower despite also indicating that better than expected results. accesso noted that the solid trading performance it reported on in November continued during the rest of 2020, and it anticipates reporting revenue of at least US$55m, ahead of its own expectations. However, the provider of queuing and ticketing technology to the leisure industry said that the continued impact of coronavirus means lower venue attendance is expected during the first half of 2021.

Legal and professional services company Gateley Holdings (+18%) said its swift and effective cost management initiatives since the start of the pandemic meant that, despite a 2.6% decline in revenue in the six months to 31 October 2020, pre-tax profit rose 9.8%. The stand-out division during the period was Property, due to the long-term nature of client projects and strong demand in logistics and housebuilding. Gateley added that positive trading momentum has continued into the second half of its financial year.

Away from earnings, healthcare service provider Totally’s (+54%) shares rose after it was awarded a number of contract extensions worth £7.2m to provide Covid-19 related health services, included 111 clinical assessments and GP out of hours services. Technical Fibre Products, a subsidiary of James Cropper (+21%), announced the purchase of electrochemical materials manufacturer PV3 Technologies. No financial details were disclosed, but the company said it expands the division portfolio of hydrogen technology products.

The team exited the position in Diaceutics following an unexpected profit warning which pushed the company into a loss making position. This event meant the risk profile of the business moved beyond the team’s original expectations.

Positive contributors included:

Totally (+54%), James Cropper (+21%), Attraqt Group (+21%), Gateley Holdings (+18%) and Science Group (+14%).

Negative contributors included:

Concurrent Technologies (-13%), Solid State (-12%), accesso Technology Group (-12%), Yourgene Health (-11%) and Mind Gym (-10%).

Discrete years' performance** (%), to previous quarter-end:

*Source: Financial Express, as at 31.01.21, total return (net of fees and income reinvested), bid-to-bid, institutional class. Non fund-related return data sourced from Bloomberg.

**Source: Financial Express, as at 31.12.20, total return (net of fees and income reinvested), bid-to-bid, institutional class. Discrete data is not available for five full 12 month periods due to the launch date of the portfolio. Investment decisions should not be based on short-term performance.

KEY RISKS

Past performance is not a guide to future performance. Do remember that the value of an investment and the income generated from them can fall as well as rise and is not guaranteed, therefore, you may not get back the amount originally invested and potentially risk total loss of capital. Some of the Funds managed by the Economic Advantage team invest primarily in smaller companies and companies traded on the Alternative Investment Market.  These stocks may be less liquid and the price swings greater than those in, for example, larger companies. The performance of the GF UK Growth Fund may differ from the performance of the UK Growth Fund and will be lower than its corresponding Master Fund due to additional fees and expenses.

DISCLAIMER

The information and opinions provided should not be construed as advice for investment in any product or security mentioned, an offer to buy or sell units/shares of Funds mentioned, or a solicitation to purchase securities in any company or investment product. Always research your own investments and (if you are not a professional or a financial adviser) consult suitability with a regulated financial adviser before investing.