Liontrust UK Smaller Companies Fund August 2021 review | Insights

Past performance does not predict future returns. You may get back less than you originally invested. Reference to specific securities is not intended as a recommendation to purchase or sell any investment.

The Liontrust UK Smaller Companies Fund returned 4.6%* in August. The FTSE Small Cap (excluding investment trusts) Index comparator benchmark returned 4.2% and the average return of funds in the IA UK Smaller Companies sector, also a comparator benchmark, was 4.6%.

The macroeconomic backdrop for markets was little changed during August. The highlight was perhaps Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole summit in which he indicated that the US central bank could start tapering its asset purchasing programme.

There was also relatively little newsflow from Fund holdings in the month. Microlise Group (+31%) made a strong start to life as a listed company following its IPO in July. The provider of transport management software announced a five-year contract renewal with J.C. Bamford Excavators for software licences and hardware sales, further bolstering its recurring revenue base.

Next Fifteen Communications (+16%) reported that trading had been ahead of expectations for the first half of its financial year ending 31 January 2022. In the three months to July 2021, the group saw revenue expand by 40% with organic growth of 29%. All areas of the business saw growth, with Customer Delivery remaining the top performer while its most recent acquisition Blueshirt Capital Advisors began trading positively. In the second half of the year, organic growth is anticipated to moderate due to strong year-on-year comparables but it is still expected to be ahead of previous guidance for the year as a whole.

Team17 Group (-6.4%) stated that it had traded in line with management’s expectations during the first half of 2021. The company recently completed the acquisitions of Golf with Your Friends and StoryToys and it aims to continue to build on its own games label in the second half of the year.

Two stocks were sold from the portfolio: Nucleus Financial Group and Trifast. Nucleus Financial exited the portfolio after its takeover offer by James Hay became unconditional while Trifast was sold after management ownership dipped below 3%, the threshold level required of all companies in the Funds.

LSL Property Services was added to the Fund. LSL Property Services has three divisions offering mortgage advice, surveying and property valuation services, and a network of estate agencies. The Fund owns the shares on the basis of a strength in distribution, with high market shares in each area of the business and a significant national presence.

Positive contributors included:

Microlise Group (+31%), Focusrite (+23%), FW Thorpe (+22%), JTC (+19%) and Next Fifteen Communications (+16%).

Negative contributors included:

Medica Group (-6.7%), Team17 Group (-6.4%), Iomart Group (-6.0%), GlobalData (-5.7%) and Cohort (-5.0%).

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

	Jun-21	Jun-20	Jun-19	Jun-18	Jun-17
Liontrust UK Smaller Companies I Inc	46.7%	1.9%	2.3%	18.7%	39.9%
FTSE Small Cap ex Its	65.2%	-12.3%	-8.6%	6.4%	28.4%
IA UK Smaller Companies	53.1%	-6.5%	-6.2%	17.2%	36.3%
Quartile	3	1	1	2	2

*Source: Financial Express, as at 31.08.21, 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 30.06.21, total return (net of fees and income reinvested), bid-to-bid, primary class.

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Key Risks

Past performance is not a guide to future performance. The value of an investment and the income generated from it can fall as well as rise and is not guaranteed. You may get back less than you originally invested. The issue of units/shares in Liontrust Funds may be subject to an initial charge, which will have an impact on the realisable value of the investment, particularly in the short term. Investments should always be considered as long term.

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.

Disclaimer

This is a marketing communication. Before making an investment, you should read the relevant Prospectus and the Key Investor Information Document (KIID), which provide full product details including investment charges and risks. These documents can be obtained, free of charge, from www.liontrust.co.uk or direct from Liontrust. Always research your own investments. If you are not a professional investor please consult a regulated financial adviser regarding the suitability of such an investment for you and your personal circumstances.

This 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. Examples of stocks are provided for general information only to demonstrate our investment philosophy. The investment being promoted is for units in a fund, not directly in the underlying assets. It contains information and analysis that is believed to be accurate at the time of publication, but is subject to change without notice. Whilst care has been taken in compiling the content of this document, no representation or warranty, express or implied, is made by Liontrust as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified. It should not be copied, forwarded, reproduced, divulged or otherwise distributed in any form whether by way of fax, email, oral or otherwise, in whole or in part without the express and prior written consent of Liontrust. Always research your own investments and if you are not a professional investor please consult a regulated financial adviser regarding the suitability of such an investment for you and your personal circumstances.