Miton UK MicroCap Trust plc Results analysis from Kepler Trust Intelligence
11 Julho 2023 - 10:00AM
RNS Non-Regulatory
TIDMMINI
Miton UK MicroCap Trust plc
11 July 2023
Miton UK MicroCap (MINI)
11/07/2023
Results analysis from Kepler Trust Intelligence
Miton UK MicroCap (MINI) has released its financial results for
the year ending 30/04/2023. Over the year, the trust has seen its
NAV decline by 29.3% on a total return basis, which compares to a
total return of -11.2% for the Numis 1000 Index and the average
return of -7.7% for the AIC UK Smaller Companies sector.
The trust's discount widened from 5.0% to 7.3%, over the
financial year. However, in the subsequent period it has again
narrowed to 5.2%. The redemption mechanism helps the trust to trade
at a narrower discount than the peer group's simple average which
is currently 14.6%.
Chairman Ashe Windham commented "...your directors believe that
Miton UK MicroCap Trust has the potential to have bursts of strong
returns." He added, "When quoted microcaps start at what we
consider to be extraordinarily low valuations, combined with such
modest institutional allocations, favorable trends can be sustained
over the coming decade or two."
Kepler View
The most recent financial year has proven challenging for Miton
UK MicroCap (MINI). The ongoing volatility in financial markets
fueled by the uncertain path of inflation and interest rates have
had a disproportionate effect on small and micro-cap stocks in
particular. However, we believe MINI offers investors a genuine
diversification opportunity through its concentration of holdings
at the smaller end of the market cap spectrum, which has proven
that in the right environment can generate significant
outperformance.
It is hard to escape the inherent volatility associated with
small and microcap investing particularly during uncertain times.
According to the managers, the reactions from investors from near
misses or even when stocks exceeded the forecast has either been
overdone on the downside or muted on the upside. Gervais and Martin
believe this period of uncertainty may provide a longer-term
opportunity for the trust. Gervais argues the underperformance of
the small and microcaps has opened up a number of opportunities at
unusually low valuations which appear to have disproportionate
upside potential, that during uncertain times can also enhance the
diversification across the portfolio's holdings.
Finally, the board continues to offer shareholders access to the
annual redemption facility which should provide reassurance to
investors by providing some downside protection to the value of
their investment by ensuring they will be able to buy and sell
relatively close to par, which in our view enhances the risk/reward
characteristics of the strategy. With the trust currently trading
at a discount of 5.2%, this may prove an attractive entry
opportunity - particularly given MINI's ability to generate
exceptional returns if the economic environment permits, as
demonstrated by the NAV total return of 277% generated between
March 2020 and May 2021.
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July 11, 2023 09:00 ET (13:00 GMT)
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