Miton UK MicroCap MINI Kepler view

Premier Miton Investors

Miton UK Microcap Trust plc (LON:MINI) has noted results analysis from Kepler Trust Intelligence.

Miton UK Microcap Trust has released its financial results for the year ending 30 April 2022. After appreciating very substantially since March 2020, the NAV total return declined by -13.1% which compares to -5.8% for the Numis 1000 Index and the average return of -7.0% for the AIC UK Smaller Companies sector.

Whilst the trust’s discount has widened from 0.31% to 5.0% and in the subsequent period it has widened further to 7.1%, the redemption mechanism means it often trades at a narrower discount than the peer group’s simple average which is currently 15.2%.

Like others in the peer group, the trust’s share price total returns over the reporting period were worsened by the share price discount resulting in a -17.2% fall over the year. However, the manager’s outlook statement outlines why they believe the strategy has major upside potential, and the newly appointed chairman, Ashe Windham, commented “Your directors are pleased with MINI’s long-term performance as it is handsomely matching its objective.”

Kepler View

As with most other small and microcap trusts, Miton UK MicroCap (MINI) results reported a decline in NAV over this most recent reporting period. With persistent inflation, and the steady appreciation of the US Dollar, micro-cap strategies haven’t held up as well as the large caps within the FTSE100 Index for example.

Despite this, the managers, Gervais Williams and Martin Turner remain upbeat about the trust’s future prospects and have long held a view that the reversal of multi-decade trends will result in the outperformance of cash generative, small-cap value companies against the highly rated large and mega-caps that have dominated the market for many years. Since the trust’s inception in April 2015, they have demonstrated relatively strong performance over the longer term with NAV total returns of 89.1% versus 63.2% from their performance comparator the Numis 1000 Index.

We think Miton UK Microcap Trust offers investors an attractive source of potential returns in a strategy that isn’t necessarily correlated with various high-beta strategies that have been so popular during the latest period of globalisation. Following this bout of share price weakness in the small-cap space, the ability for fundamentally strong micro-cap companies to grow exponentially over the long term, may provide a useful source of returns in an otherwise flat growth environment.


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