Liontrust UK Micro Cap Fund

• Encouraging return of momentum to UK small caps, which have led the recovery from the market’s April lows.
• Gear4Music rallies strongly on signs of improving trading momentum.
• Solid State also among the positive contributors to performance after a large contract win.

The Liontrust UK Micro Cap Fund returned 4.7%* in June. The FTSE Small Cap (excluding investment trusts) Index and the FTSE AIM All-Share Index comparator benchmarks returned 4.8% and 3.5% respectively. The average return of funds in the IA UK Smaller Companies sector, also a comparator benchmark, was 3.5%.

Despite ongoing US trade policy uncertainty and a spike in geopolitical tensions as Israel launched attacks on Iran, investment markets showed little signs of risk-off or flight-to-safety behaviour, even after the US became directly involved by targeted Iranian nuclear facilities.

Global equity markets largely registered modest gains, taking several to fresh all-time highs, while a spike in oil and gold prices were short-lived. It was pleasing to see UK small-cap stocks, AIM in particular, continue the strong run of short-term performance; since Liberation Day AIM has been one of the best performing markets globally.

The Fund’s strongest riser in June was Gear4Music Holdings (+61%), after it commented signs of improving market conditions. The online retailer of musical instruments and equipment has faced a very challenging consumer demand backdrop since 2022, but its latest results showed a return to growth and strengthening trading momentum. In the six months to 31 March revenues rose 4%, taking full year growth to 2% (to £147 million). Since mid-March, this growth has accelerated to a double-digit level with sales momentum and gross margins on an upward trajectory. As well as some self-help measures including a strategic review, Gear4Music has also benefitted from a more benign competitive landscape following the recent failure of two UK peers. As a result of the pickup in trading, Gear4Music commented that it expects to exceed market expectations for the financial year to 31 March 2026.

Having warned at the start of the year on the impact of short-term macroeconomic headwinds, shares in Vianet (+27%) have since recovered following a more upbeat April trading update and June’s set of full-year results. The specialist in beverage, vending and unattended retail hardware and software has been executing a strategic shift away from software sale towards long-term rental agreements with significant recurring income.

Another notable contributor was Solid State (+20%), which announced a $5.2m follow-on contract win providing IoT technology into a smart vending machine customer.

The largest detractor from performance was Eagle Eye Solutions (-43%), which lost a high-margin US contract, leading it to downgrade guidance for the financial year to 30 June 2026. Whilst the loss was disappointing it was an isolated incident and does not diminish the significant opportunity to scale with the recently announced global OEM partnership.

Positive contributors included:

Negative contributors included:

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

*Source: Financial Express, as at 30.06.25, total return (net of fees and income reinvested), bid-to-bid, institutional class. **Source: Financial Express, as at 30.06.25, total return (net of fees and income reinvested), bid-to-bid, institutional class.

KEY RISKS

Past performance does not predict future returns. You may get back less than you originally invested.

We recommend this fund is held long term (minimum period of 5 years). We recommend that you hold this fund as part of a diversified portfolio of investments.

The Funds managed by the Economic Advantage team:

• May invest in smaller companies and may invest a small proportion (less than 10%) in unlisted securities. There may be liquidity constraints in these securities from time to time, i.e. in certain circumstances, a fund may not be able to sell a position for full value or at all in the short term. This may affect performance and could cause a fund to defer or suspend redemptions of its shares. May invest in companies listed on the Alternative Investment Market (AIM) which is primarily for emerging or smaller companies. The rules are less demanding than those of the official List of the London Stock Exchange and therefore companies listed on AIM may carry a greater risk than a company with a full listing.
• May encounter liquidity constraints from time to time. The spread between the price you buy and sell shares will reflect the less liquid nature of the underlying holdings.
• May invest in companies predominantly in a single country which maybe subject to greater political, social and economic risks which could result in greater volatility than investments in more broadly diversified funds.
• Outside of normal conditions, may hold higher levels of cash which may be deposited with several credit counterparties (e.g. international banks). A credit risk arises should one or more of these counterparties be unable to return the deposited cash.

The risks detailed above are reflective of the full range of Funds managed by the Economic Advantage team and not all of the risks listed are applicable to each individual Fund. For the risks associated with an individual Fund, please refer to its Key Investor Information Document (KIID)/PRIIP KID.

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.

DISCLAIMER

This material is issued by Liontrust Investment Partners LLP (2 Savoy Court, London WC2R 0EZ), authorised and regulated in the UK by the Financial Conduct Authority (FRN 518552) to undertake regulated investment business.

It 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.

This information and analysis 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, no representation or warranty is given, whether express or implied, by Liontrust as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified.

This is a marketing communication. Before making an investment, you should read the relevant Prospectus and the Key Investor Information Document (KIID) and/or PRIIP/KID, which provide full product details including investment charges and risks. These documents can be obtained, free of charge, from www.liontrust.com or direct from Liontrust. 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.