JPMorgan UK Small Cap Growth & Income (JUGI )

Performance

The £517m portfolio run by Georgina Brittain and Katen Patel reported a net asset value (NAV) total return of 0.6% in the 12 months to 31 July, falling short of the 2.5% from the Numis Smaller Companies plus AIM benchmark. The shares were even bigger laggers, declining 7.6% over the year.

The results were ‘disappointing’ given many of the holdings did well in the year but it was not enough to offset substantial issues with three holdings.

Ashtead Technology, which rents subsea equipment to the oil and gain industry, underperformed ‘significantly’ due to concerns about its end markets and contract delays due to geopolitical factors.

Cosmetics group Warpaint was down despite hitting profit forecasts, and promotional products printer 4imprint was troubled by the impact of US tariffs. The managers reduced their positions in all three companies.

Portfolio changes

New additions included retirement solutions provider Just Group, which has received a bid at a significant premium, wealth manager Quilter, Cohort and Avon Technologies, which were bought to increase defence exposure, and Filtronic, which designs and manufactures radio frequency communications products for the space and defence industries.

Holdings in MJ Gleeson, Next15 and Oxford Instruments were sold on concerns over the trading outlook.

Dividend

The trust introduced an enhanced dividend policy in 2024 targeting a 4% annual yield. However, the revenue earnings per share were 9.8p in the year versus 10.4p the year before. The dividend, under the policy, is 15.04p which is just 0.65 times covered by revenue earnings and therefore for the financial year commencing 1 August 2025, the ‘intention is to pay dividends totalling 14.52p per share’.

Discount

The discount widened over the year which the board said was ‘unjustified’. It also remained committed to share buybacks, repurchasing 6.9m shares throughout the year.

What the managers say

Brittain and Patel said volatile markets had made the small and mid-cap space a ‘tricky’ place.

‘The level of M&A, and the number of companies initiating share buy backs due to their undervalued equity in our area of the market, confirm the compelling investment case that we see, and it is notable that foreign investors have recognised this and have been allocating capital to the UK stock market,’ they said.

Strategic Equity Capital (SEC )

Performance

The £164m Gresham House fund that last week survived a 100% tender offer, reported a 0.1% fall in NAV total return in the year to end of June, while the shares fell 0.4%, both significantly behind the 13.1% gain from the FTSE Small Cap index.

The issue was the trust’s exposure to AIM shares, which were hit by last year’s Autumn Budget decision to slash the inheritance tax (IHT) relief for AIM-quoted stocks.

This was compounded by a general der-rating across UK smaller companies in the first half, but there was a rebound in the second half as inflation fell towards target levels and interest rate expectations moderated.

Of the portfolio’s six largest detractors in the first half, four of these investments were the biggest contributors in the second half.

Portfolio changes

Two new investments were made, including biopharmaceutical data analytics and services group Diaceutics, which is a ‘high margin business…successfully transition its business model…towards a higher-quality, contracted recurring model’.

Digital marketing specialist Next15 Group was also added, with manager Ken Wotton ‘building a stake following share price weakness due to poor sector sentiment and some short-term profit weakness which is expected to be resolved’.

Dividend

Revenue earnings increased 21.2% over the year thanks to a focus on ‘cash-generative businesses’, which allowed the board to announce a dividend of 4.25%, an increase of 21.4% on last year.

Corporate action

The board will continue its buyback programme to manage the discount, which currently sits at just over 9%. Following its 100% tender offer, the board intends to alter its approach by making available 50% of the net gains from realised profitable transactions in each financial year to fund buybacks if the discount is 5% or more.

What the manager says

Wotton said the M&A market ‘remains highly supportive’ of the trust and the ‘significant valuation disconnect between UK public markets and private transaction multiples continues to attract interest from both corporate and private equity acquirers’.

This trend should drive SEC returns and help ‘crystalise the intrinsic value of our portfolio holdings which is not currently being reflect in public market prices’.

Bellevue Healthcare (BBH )

Buyback authority

The portfolio of global healthcare stocks is seeking further share buyback authority to protect its zero discount policy despite already shrinking the trust to £151m.

It introduced a zero discount policy in April this year, with the aim of keeping the shares trading at or around NAV in normal market conditions.

Since then it has repurchased 115 million shares, including buying back a bumper 30% of the share capital in the three months to end of June at a cost of £86m. However, the discount remains at 4%, prompting the trust to repurchase more shares.

Further authority

To continue working towards a zero discount, the board has agreed that when the existing authority to repurchase shares has been fully utilised, it should hold another general meeting to renew it.

RIT Capital (RCP )

Performance

The £4.4bn Rothschild-backed global trust increased its NAV 2.4% in September, taking NAV returns for the year to 10%.

Global equity markets were a boon for the trust as performance broadened before US tech stocks and the MSCI China index outperformed the S&P 500, which manager Maggie Fanari said reflected ‘a more balanced contribution to global equity performance’.

Sentiment was also lifted by a US interest rate cut – the first this year - helping emerging markets and Europe to push higher, despite the latter reporting ‘mixed economic data and political uncertainty’.

In October 2025, RCP exited its equity position in Webull, generating a cash return of approximately 2 times on the equity investment.

What the manager says

Fanari said the portfolio has benefited from its diversified nature, with investments across quoted companies, unquoted companies, and uncorrelated assets such as gold and hedge funds.

‘Performance was led by quoted equities across investment themes and regions,’ she said.

‘Uncorrelated strategies also performed well, supported by the gold rally, while private investments were flat, as we await third quarter valuations.’

Tufton Assets (SHIP )

Performance

The owner of a £364m shipping fleet of second-hand tankers and bulkers reported a 5% NAV total return in the third quarter in sterling terms, and a 3.3% lift in dollar terms. Charter values rose in both tanker and bulker markets, although operating profit was still lower than the second quarter due to scheduled dockings on some vessels.

Portfolio activity

Post quarter end, a contract was extended for vessel ‘Courteous’ for a minimum of one year, with the same expected on ‘Mindful’ later in the month.

SHIP sold ‘Neon’ for $23.5m – a 2.6% premium to its NAV at the end of June.

What the manager says

Manager Andrew Hampson said the strength in the shipping market ‘appears set to continue through the rest of the year’.

‘We continue to seek avenues to enhance shareholder returns by securing attractive yields on the company’s vessels and for optimal allocation of capital in line with the priorities of our mid-term strategy review,’ he said.

What the analysts say

Stifel analyst Will Crighton said the first half of the year was tough for SHIP, with the NAV sliding 10.4% in the first quarter and 4.3% in the second.

‘Valuations had been falling against a backdrop of uncertainty and weaker rates, but the market has become more settled, and we had expected to see a rise this quarter,’ he said.

‘The managers had noted that July and August potentially reflected an inflection point. We still expect an announcement over the next few months regarding a potential net investment using the proceeds from the gas taker sale.’

The shares trade at a 17% discount and 9% yield, leaving Crighton to have a ‘positive’ rating.