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Liontrust UK Micro Cap Fund

September 2021 review
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 Micro Cap Fund returned 1.1%* in September. The FTSE Small Cap (excluding investment trusts) Index and the FTSE AIM All-Share Index comparator benchmarks returned -2.7% and -3.7% respectively. The average return of funds in the IA UK Smaller Companies sector, also a comparator benchmark, was -2.6%.


Cloud computing, connectivity and analytics provider Beeks Financial Cloud Group (+40%) was one of the Fund’s strongest stocks in August after releasing a trading update. In September it went on to publish full-year results which contained few surprises, but the shares were still able to notch up significant further gains after a Q1 trading update was also issued on the same day. Sales in Q1 were ahead of expectations at over $5m in total contract value, pushing the Group’s annualised recurring revenues up to £15m. Revenues for the year to 20 June 2022 are now expected to be ahead of consensus analyst estimates.


Animalcare (+15%) also announced that it is on track to beat market estimates. It saw favourable conditions in the six months to 30 June which have continued into the second half of the year; this momentum has led the company to raise its 2021 profit expectations. Interim revenues rose 13% to £39m, with particularly strong growth in its Companion Animals division, while gross profit margins expanded 260 basis points to 54.6% as it focused on higher-margin brands


Investors welcomed Instem’s (+13%) £11.4m acquisition of Swiss life sciences software company Pathology Data Systems (PDS).  PDS has historically been a direct competitor of Instem’s with a particularly strong market share in regulatory submissions using SEND (the Standard for the Exchange of Non-clinical Data). Instem expects to rationalise products and services in a manner which increases operating margins and contributes to an immediately earnings enhancing deal. Towards the end of the month Instem also released interim results showing 8% organic revenue growth which was boosted to 41% by recent acquisitions (of The Edge Software Consultancy and d-Wise Technologies).


Among the detractors, Belvoir Group (-20%) saw some profit-taking in the aftermath of interim results; heading into September, the share price had doubled the level at which it started 2021. In August the company notified the market it had traded ahead of expectations in the six months to 30 June and September’s results release confirmed a 41% increase in revenue and a 51% rise in profit before tax. The franchised lettings agency commented that it is confident of achieving a “strong performance for the full year” which may have disappointed any investors looking for a more concrete upgrade to 2021 financial guidance following the strength of first-half trading.


Energy procurement management company Inspired (-12%) also suffered a share price slide despite issuing interim results that seemed solid. The shares have a strong retail following, and with well-publicised problems in the domestic energy market it seems investors were worried the business may be exposed to bad debts. In reality, the majority of Inspired’s customers are industrial and commercial (I&C) users who tend to procure energy from the larger providers, so the crisis should have little knock-on to its bottom line. Additionally, high energy prices should increase demand for its energy consultancy services (which help I&C customers become more energy efficient). Inspired grew revenue by 31% in the first half of the year and is confident of achieving market expectations for full-year results.


Brickability, EKF Diagnostics and Mattioli Woods were all sold from the portfolio having exceeded the £275m market cap limit at which we begin to consider a managed exit from positions in the UK Micro Cap Fund.


The Fund added a position in Calnex Solutions, a supplier of hardware solutions which enable customers in the telecommunications industry to test and validate the performance of critical network infrastructure equipment. Its key mission is to “prove performance” – prove that this equipment can meet international standards and operators’ own quality controls. With a bedrock in innovation, and 18% of revenues spent on R&D, the fund managers believe Calnex’s key competitive advantage is its intellectual property.


The Fund also bought into BigBlu Broadband, a provider of fixed wireless and satellite broadband solutions to rural areas, predominantly in Australia and the Nordic regions. With strengths in both distribution and recurring income from its existing customer base, BigBlu also has the opportunity to leverage new satellite technologies and 5G infrastructure which are coming on stream in 2022. These are likely to bring speeds akin to fibre to many parts of the globe over the next two years and with a strong market position in filling satellite capacity already, there is scope for the business to expand into other territories.


Positive contributors included:

Beek’s Financial Cloud Group (+40%), Mercia Asset Management (+17%), Gateley Holdings (+17%), Animalcare Group (+15%) and Instem (+13%).


Negative contributors included:

Belvoir Group (-20%), MJ Hudson (-13%), Attraqt (-12%), Inspired (-12%) and Record (-8.1%).

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







Liontrust UK Micro Cap I Acc






FTSE Small Cap ex ITs






IA UK Smaller Companies













*Source: Financial Express, as at 30.09.21, total return (net of fees and income reinvested), bid-to-bid, institutional class.


**Source: Financial Express, as at 30.09.21, total return (net of fees and income reinvested), bid-to-bid, institutional class.

Understand common financial words and terms See our glossary
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. 


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. 
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