Liontrust UK Smaller Companies Fund

August 2021 review

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.

 

For a comprehensive list of common financial words and terms, see our glossary here.

 

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.

Monday, September 13, 2021, 3:05 PM