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MINI fails to keep up with AIM index

MINI fails to keep up with AIM index

MINI fails to keep up with AIM index – Miton UK Micro Cap has published results for the year ended 30 April 2018. Over the year, the NAV returned 8.4%. This compares with the AIM All-Share Index, which returned 10.7% (AIM stocks account for three quarters of the portfolio). This performance is somewhat higher than the returns on other smaller company indices, with the SmallCap (excluding Investment Trusts) Index (about 11% of the portfolio) returning 6.1%. The dividend has been maintained at 0.36p. The fund’s returns lag those of the AIM All-Share Index since launch, with the fund returning 41.5% against 45.8% for that index. It has outperformed the Small Cap Index, however. 10.8% of the shares elected for redemption this year.

Extract from the managers’ report

During the first half of the year, the Company’s portfolio lagged the market rise because growth stocks performed strongly and other stocks remained overlooked. In the second half of the year, the equity markets were more unsettled and, interestingly, microcaps then enjoyed a period of outperformance. In particular, many of the Company’s holdings tended to perform well in this period, and hence the Company outperformed.

Over the year as a whole, a number of holdings performed very strongly. For example, the share prices of Kape Technologies (formerly Crossrider), Frontier IP, Zotefoams and Wey Education all rose so much that they each returned more than 1% to the return of the Company alone and, in the case of Yu Group and Versarien, more than 2%. In contrast, two stocks, Fishing Republic and Totally, that had performed strongly in the prior year, peaked out and detracted returns by more than 1% each.

At the end of April, the largest industry sector represented in the portfolio was Software & Services at 13.5%. This included Kape Technologies at 3.7% and Cerillion, a vibrant mobile phone software company, (not to be confused with Carillion which became bankrupt recently) at 2.2%. The second largest industry sector is Materials at 12.3% with Zotefoams comprising 2.3% and Versarien at 1.4%. The third largest sector is Diversified Financials at 8.6%, which includes Frontier IP at 2.9% and Alpha FX at 1.6%. In addition, the portfolio held significant cash balances during the period of unsettled markets in February, and the Company was therefore in a comfortable position to fund the redemptions at the year end without detracting from the long-term returns.”

[QD comment: many investors probably compare MINI against River & Mercantile Micro Cap and wonder what is going on. MINI has made you 11% a year over the past three years in NAV terms while RMMC has made almost 26% a year. While they do both invest in microcap stocks, MINI’s approach is more cautious than RMMC’s. It will be interesting to see how they stack up after a period when UK smaller companies haven’t been doing so well. MINI’s managers say “many of the company’s holdings have been selected for their ability to sustain growth even at a time of commercial challenge”.]

MINI : MINI fails to keep up with AIM index

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