Liontrust UK Micro Cap Fund

The Liontrust UK Micro Cap Fund returned 8.1%* in April. The FTSE Small Cap (excluding investment trusts) Index and the FTSE AIM All-Share Index comparator benchmarks returned 6.1% and 7.4% respectively. The average return of funds in the IA UK Smaller Companies sector, also a comparator benchmark, was 6.9%.

Ongoing positive sentiment towards the vaccine effort and related economic recovery supported more broad-based market gains in April. The FTSE 100 large-cap index returned 4.1%, the FTSE 250 mid-caps gained 4.9% and the FTSE Small Cap Index registered a 5.3% return.

Signs of increasing economic confidence were apparent in macro releases such as March UK retail sales. This showed a 5.4% increase on February, ahead of the 1.5% consensus forecast, and 7.2% above March 2020’s level. Across the market, a range of companies also pointed to improving demand from end markets.

Cerillion (+37%) was a stand-out performer in April. The company provides business and operational software systems, primarily to the telecoms industry. At the end of March, it signed a 10-year, US$18.4m contract – its largest to-date – with a network operator in Latin America. This large contract contributed to trading in the six months to 31 March 2021 exceeding management’s expectations, as revealed in an April update showing sales and earnings growth of 25% and 77% year-on-year respectively.

Contract success and an update on trading also propelled shares in Totally (+25%) higher. It announced contract extensions for its Urgent Care division of £17.8m, before going on to release a trading update for the year to 31 March 2021 that described earnings as substantially ahead of expectations. Totally’s frontline healthcare services have experienced high demand since the onset of the Covid-19 pandemic.

While Adept Technology Group (+24%) outlined trading that was in-line with, rather than ahead of, expectations, its shares still rallied sharply. The company provides multi-site managed IT and telecoms, and it believes it will benefit as organisations strategically review their long-term technology requirements following the changes to working environments over the last year.

Having staged a strong rally to match and exceed their pre-Covid level, shares in Attraqt Group (-9.8%) gave back some ground after a trading update described in-line trading for the quarter to 31 March 2021. The ecommerce online search specialist is benefitting from a structural shift by retailers to focus on their online offerings in response to the pandemic.

Shares in Tristel (-5.9%) slipped after the company commented that the negative effect of Covid-19 on patient examinations – and therefore sales – is unlikely to reverse before its year end of 30 June. While sales of its medical device disinfectant to the NHS have been heavily hit by this effect, there is a brighter note in the form of its surface disinfectants sales, which have risen sharply.

The small drop in Tribal Group’s (-3.8%) share price belies a relatively upbeat AGM statement. The provider of education sector software commented that trading remains buoyant and in line with its expectations. During April, it bolstered its ambitions to provide a comprehensive software-as-a-service offering to the education sector through the acquisition of Semestry for up to £6m. Semestry is a specialist in cloud-based scheduling and timetabling software.

Positive contributors included:

Cerillion (+37%), Surgical Innovations Group (+26%), essensys Group (+26%), Totally (+25%) and Adept Technology Group (+24%).

Negative contributors included:

Attraqt (-9.8%), Quartix Holdings (-9.7%), Tristel (-5.9%), EKF Diagnostics (-5.1%) and Tribal Group (-3.8%).

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

*Source: Financial Express, as at 30.04.21, 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 31.03.21, 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.