The second half of last year provided no let up forJPMorgan US Smaller Companies (JUSC) whose underperformance against the Russell 2000 index worsened, its annual report today shows. The £213m investment trust managed by Don San Jose, Daniel Percella and Jonathan Brachle at JP Morgan Asset Management with a “growth at a reasonable price” philosophy, fell further behind the benchmark as a narrow band of winners from the artificial intelligence boom, not held in the portfolio, surged between August and October. As a result, while JUSC did pare back the decline in net asset value (NAV) from 12.4% in the first half to 10.9% for the whole year, the Russell 2000 recovered to post a 4.8% gain for 2025 having been down 10.3% in the first six months of the year. The scale of the trust’s underperformance discouraged investors and the gap between the share price and NAV widened with shareholders incurring a 15.3% loss for the year. The board responded by buying back 11.4% of the company’s shares at an average discount of 9.3%. Since the year-end performance has stabilised with the company now on a one-year total return of 17%, although a long way behind the Russell’s 45% advance. In response, the board has cut shareholder costs with the annual management fee reduced to 0.7% from the start of this year on net assets up to £300m and 0.6% above that. Previously a flat 0.7% was paid on gross assets, including borrowing. While acknowledging that the timing of a recovery is difficult to predict, chair Dominic Neary said, “the valuations of US smaller capitalisation stocks relative to larger capitalisation stocks are now at historical lows, signalling that a rebound in smaller capitalisation stocks is well overdue.” 

Matthew Read, senior analyst at QuotedData, said: “This was a disappointing set of results for JPMorgan US Smaller Companies shareholders, with stock selection – particularly in industrials and healthcare – hurting performance. However, the benchmark was driven higher by more speculative, AI-related names, and JUSC’s focus on quality and growth at a reasonable price was always likely to lag in that environment.

“In many markets, 2025 saw smaller companies begin to outperform large caps again, as they have tended to do over the long term. That was not the case in the US – or the UK, for that matter. Sentiment will shift at some stage, though whether investors favour growth or value when it does remains to be seen.”

RIT Capital Partners (RCP), the defensive, multi-asset fund backed by the Rothschilds, limited its investment loss to 1.9% in last month’s market global selloff caused by the US-led war on Iran. Although the shares fell 4.8%, the fund managers were able to minimise the impact on the portfolio from the 5.9% slide in the MSCI All Country World index with profit taking in gold miners and emerging market shares early in the month, while its unquoted investments posted a positive return as more fourth quarter fund valuations came in. Net asset value per share fell from £30.26 to £29.67 in the month with debt at fair value. At £21.85 the shares stand on a 26% discount after a first quarter decline of 7.5%. They have returned 13.2% over one year.

AEW UK REIT (AEWU), the £168m smaller properties fund considering an all-share bid for £61m rival Alternative Income REIT (AIRE), saw net asset value (NAV) per share fall 0.9% to 108.38p in the first quarter. A 7.94% fall in its Tanner Row property in York after lead tenant National Car Parks fell into administration offset gains in its industrial assets in Runcorn and St Helens. The company is exploring interest from other operators and potential alternative uses for NCP’s centrally located, mixed-use site. An industrial property in Walsall declined 3.79% as one of its two tenants approached a lease expiry, although portfolio manager Laura Elkin believes this could provide an opportunity to lift the rent. Including the 2p per share quarterly dividend the total investment return was 0.96%. The interim dividend was partly uncovered as earnings per share fell to 1.71p from 2.36p in the previous quarter reflecting two vacancies, one of which is now under offer, and Odeon negotiating a cut in rent on its new five-year lease in Southend from £535,000 to £400,000, a level that Elkin said was now sustainable. The shares fell 8.2% to 99p but this month have recovered to 106.5p on a narrow 1% discount where they offer a 7.5% yield. Winner of QuotedData’s “Best for Property” award last year, AEWU has the best five-year performance in its sector with a total shareholder return of 75.9%.

GCP Infrastructure (GCP), the £625m investment company clearing its debts with the £47.5m sale of social housing properties, said the valuation of its portfolio was broadly stable in the first quarter of the year. Net asset value (NAV) per share dipped 0.01p to 100.26p in the three months to 31 March with a 0.57p boost from higher short-term power price forecasts offset by lower inflation forecasts in the Spring Budget and a decrease in generation from its renewable energy investments. At 75.4p the shares have recovered from a fall in last month’s volatile markets and are back to their level at the start of the year on a 24% discount and 9% yield.

QuotedData’s Matthew Read said: “GCP Infrastructure continues to demonstrate the defensive qualities that have long appealed to shareholders, with NAV broadly stable despite the usual quarter-to-quarter noise from inflation assumptions, power prices and operational updates. Interestingly, changes to long-term inflation assumptions have pushed down the NAV but these don’t include the impact on inflation from the current conflict in the Middle East, which could raise inflation in the near term.

In the meantime, the company’s portfolio continues to perform in line with expectations and it is delivering on its capital allocation policy – for example, buybacks are adding value, disposals and refinancings are helping release capital, and management appears determined to narrow the persistent discount.”

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