Funds to buy UK small-cap stocks on a discount

Investment trusts investing in smaller companies are recovering, yet share prices haven’t caught up, says Max King.

Bus on Westminster Bridge © Getty Images/iStockphoto
Getty Images/iStockphoto
(Image credit: © Getty Images/iStockphoto)

UK equities performed dismally in both absolute and relative terms in the first half of the year with the FTSE All-Share index returning -17.5% while the MSCI World index gained 0.5% in sterling terms. The performance of small caps was even worse; the Numis Small Cap index (excluding investment trusts), which represents the bottom 10% of the UK market by value, returned -25%. Explanations for this included the greater domestic focus of smaller companies, the exodus from UK active funds – nearly all of which are overweight mid and small caps – and the relentless move to passive investing, which favours large caps.

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Max King
Investment Writer

Max has an Economics degree from the University of Cambridge and is a chartered accountant. He worked at Investec Asset Management for 12 years, managing multi-asset funds investing in internally and externally managed funds, including investment trusts. This included a fund of investment trusts which grew to £120m+. Max has managed ten investment trusts (winning many awards) and sat on the boards of three trusts – two directorships are still active.

After 39 years in financial services, including 30 as a professional fund manager, Max took semi-retirement in 2017. Max has been a MoneyWeek columnist since 2016 writing about investment funds and more generally on markets online, plus occasional opinion pieces. He also writes for the Investment Trust Handbook each year and has contributed to The Daily Telegraph and other publications. See here for details of current investments held by Max.