Poor performance and a persistent discount have encouraged almost a fifth of shareholders in Miton UK MicroCap (MINI ) to get out at net asset value (NAV) at the trust’s annual redemption facility.

The £50m trust, which focuses on the UK’s smallest listed companies, received redemption requests for 127.7 million shares, or 18.7% of issued capital. This will reduce its market capitalisation dramatically to £40m, Numis analyst Gavin Trodd estimates.

While this is not its largest exodus in recent years – 20% of the register redeemed in 2020 – it is a significant fall in the trust’s total assets.  

Previous redemptions

table.tableizer-table { font-size: 12px; border: 1px solid #CCC; font-family: Arial, Helvetica, sans-serif; } .tableizer-table td { padding: 4px; margin: 3px; border: 1px solid #CCC; } .tableizer-table th { background-color: #104E8B; color: #FFF; font-weight: bold; }

Year	Redemption as % of share capital
2023	19%
2022	13%
2021	20%
2020	9%

Source: Numis

Premier Miton managers Gervais Williams and Martin Turner (pictured below) have overseen a 13.2% fall in the underlying returns over the past 12 months, while the shares have been stuck at around 8% below par, as the racier end of the UK market appears too risky for investors. The board has not actively bought back shares to reduce the deficit. 

The shares gained 2.9% to 54p on Thursday morning in response to the news, a 12% discount to the latest NAV of 58.15p per share. 

In the most recent factsheet, the managers highlighted how AIM-listed companies have not been beneficiaries of foreign investment in the UK, which has ‘proved unhelpful given the speed and scale of interest rate increases over recent quarters’.

More positively, the duo noted that even in a troubled economic environment, the outlook was favourable for UK-quoted micro-caps versus unlisted competitors that could go under.

‘As listed companies can raise additional capital, they have the potential to retain the staff employed at overindebted but otherwise viable businesses by acquiring businesses debt-free from the receiver,’ they wrote, adding that the favourable outlook might take a little longer to be recognised.

The trust added to its FTSE 100 put option with a term to December covering more than half the portfolio, with an additional FTSE 100 put that extends to June 2024 given the low costs. This means the MINI portfolio has 95% insurance against stock market crashes up to mid-December, with just under half covered from then until mid-June 2024.

Top positions include a 7.5% weighting to electric services company Yu Group (YU), 3.1% to CyanConnode Holdings (CYAN), which provides ‘mesh technology’ including smart meters and intelligent street lighting systems, and 3% to MTI Wireless Edge (MWE), a producer of commercial off-the-shelf and custom-developed antenna solutions.

Performance since launch

Source: Morningstar