The UK market has been unloved for many years but Jonathan Brown, lead fund manager of the Invesco Perpetual UK Smaller Companies Investment Trust plc, believes there are many reasons for cautious optimism. As bottom-up stock pickers, Jonathan and co-manager Robin West believe the diversity of the UK smaller companies sector offers great opportunities.
In a recent Rayner Spencer Mills UK equities masterclass, Jonathan joined a panel of fund managers to discuss investing in challenging market conditions, and where opportunities might be found within the UK smaller companies sector.
Navigate to the timestamps below for answers to the following questions:
3.18 – Investment philosophies
6.10 – What is the current attraction of the UK from an equity investor point of view?
8.48 – What effect has a weaker sterling had on valuations in the UK versus overseas, and on small caps versus large caps?
11.51 – What are the impacts of inflation and rising interest rates on markets?
21.56 – How has the cost of living crisis in the UK and a weaker consumer impacted stocks?
29.35 – Where are opportunities being found?
39.21 – For companies in the UK smaller companies sector, are supply chain issues easing post-Covid?
42.00 – Corporate transactions, IPOs and secondary issues
The 2025 equities outlook is improving. Balance sheets look healthy, and many stocks are attractively valued, though geopolitical risks remain. Find out more.
Markets were relatively volatile during the quarter, with investors being pulled between the negatives of geopolitics and weaker industrial demand, and the potential benefit of lower interest rates.
Better inflation data prompted a strong start to the quarter, however, there was a sharp sell-off in August as positivity around interest rates was swamped by fears of a US recession. These fears gradually dissipated, and markets largely recovered by the end of the quarter.
The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.
When making an investment in an investment trust/company you are buying shares in a company that is listed on a stock exchange. The price of the shares will be determined by supply and demand. Consequently, the share price of an investment trust/company may be higher or lower than the underlying net asset value of the investments in its portfolio and there can be no certainty that there will be liquidity in the shares.
The Invesco Perpetual UK Smaller Companies Investment Trust plc invests in smaller companies which may result in a higher level of risk than a product that invests in larger companies. Securities of smaller companies may be subject to abrupt price movements and may be less liquid, which may mean they are not easy to buy or sell.
The use of borrowings may increase the volatility of the NAV and may reduce returns when asset values fall.
The Invesco Perpetual UK Smaller Companies Investment Trust plc uses derivatives for efficient portfolio management which may result in increased volatility in the NAV. In addition, some companies are suspending, lowering or postponing their dividend payments, which may affect the income received by the product during this period and in the future.
All information correct as at 27 September 2022 unless otherwise stated.
This is marketing material and not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication.
Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice.
For more information on our investment trusts, please refer to the relevant Key Information Document (KID), Alternative Investment Fund Managers Directive document (AIFMD), and the latest Annual or Half-Yearly Financial Reports. This information is available on our website.
Further details of the Company’s Investment Policy and Risk and Investment Limits can be found in the Report of the Directors contained within the Company’s Annual Financial Report.
If investors are unsure if this product is suitable for them, they should seek advice from a financial adviser. For details of your nearest financial adviser, please contact IFA Promotion at www.unbiased.co.uk.
