James Carthew: This overly punished small-cap trust could face a dramatic recovery
River UK Micro Cap is an extreme example of the malaise afflicting smaller companies, but it could come swinging back with force once sentiment improves.
Trump’s attack on Iran has derailed the global economy and choked off a nascent recovery in UK markets that had been building since last November’s budget. Not that the budget contained some magic fix to the UK’s problems, but it at least brought an end to the paralysing uncertainty that Labour seems to delight in creating by endlessly trailing and then scrapping tax-raising initiatives.
Double digit share price and NAV falls were common across all UK focused trusts over March, wiping out the gains made in January and February. Amongst the hardest hit was River UK Micro Cap (RMMC), which invests in UK stocks with a free float of between £20m and £100m.
The universe of over 250 micro-cap companies within those market cap bands inevitably includes some that are subscale and struggling, but it also includes some of the UK’s more exciting businesses. Those in the latter group are the ones that RMMC backs.
Manager George Ensor says… read more here