Manager Commentary

Please read in conjunction with the Performance section above.

30 November 2020Gervais Williams & Martin Turner

The Trust’s NAV rose 7.48% during November compared to a rise of 10.86% for the FTSE-AIM All-Share Index. Many of the best performing stocks during the month were those with the more stretched balance sheets, as investors anticipated that some will now generate cash sooner than anticipated, and hence will get away without diluting future returns via additional equity issuance. In contrast, the Trust often holds stocks that are anticipated to generate abnormal cash returns on prior investment, and scales back stock specific risk by prioritising those with more resilient balance sheets. We believe the Trust’s returns over the year to date or since listing in April 2015 justify the Trust’s portfolio positioning.

Going forward, we believe that the UK stock market is well-positioned for a period of major performance catch-up. In fact, we believe the UK stock market recovery - when it comes - will be much larger than anticipated. In addition, we would argue that the upside potential for UK micro-caps could be even larger again. Furthermore, we would hope that the active stock selection in the Trust will incrementally add further recovery uplift on top. Overall, for all of these factors we believe that the prospects for the Miton UK MicroCap Trust are now stronger than they have been for some decades.