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Liontrust UK Micro Cap Fund

November 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 -4.0%* in November. The FTSE Small Cap (excluding investment trusts) Index and the FTSE AIM All-Share Index comparator benchmarks returned -4.9% and -2.8% respectively. The average return of funds in the IA UK Smaller Companies sector, also a comparator benchmark, was -3.8%.


The FTSE All-Share was trading fairly flat for November and not far from 2021’s highs heading into the last few days of the month, but the identification of the Omicron variant of Covid-19 triggered a sharp drop. Until that point, the market narrative had largely remained centred on the inflationary forces generated by economic recovery from the last two years’ lockdown measures. However, the prospect of a fresh surge in the pandemic sent shares lower, particularly those exposed to any potential public health measures that restrict social contact and travel. Travel & Leisure (-18%) was, unsurprisingly, the weakest sector in the FTSE All-Share Index.


The Fund has relatively low exposure to the businesses that are most affected by such restrictions. The portfolio’s detractors were predominantly reacting to stock-specific developments. The largest faller blamed Brexit issues – Gear4Music (-24%) generated interim revenue which was in line with its expectations at £65m but stated that Q3 sales have been weaker than hoped for, a trend it blames on Brexit-related supply problems. As a result, the company has downgraded EBITDA guidance for this financial year (to 31 March 2022) to £12m+, which compares to a consensus analyst forecast for around £14m. It hopes that the build-out of its European infrastructure with new hubs in Ireland and Spain will help ease supply chain issues and allow European sales growth to recover.


Eckoh (+17%), the provider of secure payment products and customer contact solutions, was one of the best performing holdings in November after announcing it had won a contract with a leading global food and drink company – its largest ever global Secure Payments Cloud contract win. Eckoh’s software allows companies to manage customer engagement via multiple communication channels, and it has also developed a patented payment solution which enables customer payment information to be received in a secure way. Earlier in the month, Eckoh announced in an interim trading update that it had seen modest growth in underlying revenues as activity levels have recovered from the pandemic; its full-year guidance is unchanged.


Advanced paper products company James Cropper (+27%) also rose after the group announced that it had seen a 47% increase in revenues to £49.8m in the six months to 25 September, compared to £34m in the previous year, with growth coming from all divisions. Paper sales are forecast to exceed pre-pandemic levels by the start of 2022, following strong demand for recycled fibre content and responsible sourcing. 


Tatton Asset Management (+12%) was another stock to report half-year results. After generating organic net inflows of £652m over the period, assets under management rose to £10.8bn as of 30 September and had risen further to £11.1bn by the time of the announcement. During the six months, Tatton completed the acquisition of £650m Verbatim funds and sealed a five-year strategic distribution partnership with Fintel plc, which it says will provide access to 3800 firms and over 6000 users.


An AGM statement from Eagle Eye Solutions (+7.3%) revealed that revenue growth in the three months to 30 September – Q1 of its new financial year – had accelerated to 35%, up from 27% in Q4. As a result, the company now thinks that full-year EBITDA will be comfortably ahead of its prior expectations. Eagle Eye provides a B2B software platform allowing large retail clients to manage customer loyalty schemes, offers and promotions. Clients include Pret a Manger, Staples US Retail and Halfords, and it also announced a new trial with ASDA during November.


Calnex Solutions (-14%) was the Fund’s best performer last month after an October trading update raised sales and profits guidance for the year to 31 March 2022. Calnex supplies hardware solutions which enable customers in the telecommunications industry to test and validate the performance of critical network infrastructure equipment. In November it gave back much of October’s gains despite issuing interim results in which it stated its confidence in hitting analysts’ upgraded forecasts. Calnex commented that the strong first half trading has carried through to the second half of the year so far, with demand for its telecoms testing equipment remining robust.


Adept Technology (-23%) fell despite issuing solid interim results in which the company confirmed it is on track to meet expectations for the full year to March 2022.


A position in Bango was added to the Fund in November. Bango is a provider of carrier billing and subscription bundling solutions which enable customers to pay for app store purchases and digital subscriptions via their mobile phone bill. In doing so, it harnesses valuable data around customer purchasing behaviour, which the company aggregates and sells to merchants in the form of segmented “audiences”, allowing these customers to target social media advertising more effectively. Bango’s customers include some of the world’s biggest technology companies, such as Google and Amazon. The Fund owns the shares on the basis of the intellectual property within the payments platform itself, as well as an embedded distribution strength in the form of the deeply entrenched relationships with both large app store customers and the regional and national telecoms operators who enable the carrier billing services.

Positive contributors included:

James Cropper (+27%), Eckoh (+17%), Tatton Asset Management (+12%), Eagle Eye Solutions (+7.3%) and Solid State (+6.5%).


Negative contributors included:

Gear4Music (-24%), AdEPT Technology (-23%), Quixant (-21%), Inspiration Healthcare (-16%) and Calnex Solutions (-14%).


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 30.11.21, 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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