Small but beautiful: experts reveal their favourite investment trusts with less than £200 million of assets

Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC), said: “Investment trusts come in all shapes and sizes but it tends to be the largest trusts that attract most attention. That’s a shame because small can be beautiful in the investment trust industry. There are some smaller and relatively low-profile trusts that could make excellent additions to investors’ portfolios, but they don’t always get the interest they deserve.”

Selected investment trusts with less than £200 million of assets

^{Source: theaic.co.uk / Morningstar (as at 16/01/26)}

Thomas Milford, Investment Analyst at Crossing Point, said: “BlackRock Income & Growth is ideally positioned to benefit from the current ‘UK renaissance’, with the FTSE 100 having breached 10,000 for the first time in early 2026. This surge is driven by a global rotation toward the value and income sectors such as banking and energy, where the UK holds a structural advantage. By avoiding growth-heavy tech names, the trust acts as a vital diversifier against stretched valuations in other markets. It also offers a reliable 3.4% yield, supported by a consistent dividend track record and a focus on high-quality, cash-generative companies. With the trust still trading at a meaningful discount of approximately 12%, there remains significant potential for capital appreciation as demand for undervalued UK equities continues to grow.

“Additionally, BlackRock American Income offers a compelling opportunity for investors seeking differentiated US exposure, primarily through its market-leading 6% annual dividend target, which currently represents the highest yield in the North America investment trust sector. Performance has been equally noteworthy. It has used a new systematic ‘active equity’ approach that leverages AI and big data to uncover undervalued companies. The trust has delivered some of the strongest total returns in its peer group over the past year. This strategic shift has clearly resonated with the market, as evidenced by the sharp narrowing of the discount to about 1% over the past month, signalling a significant increase in investor demand and confidence in their modernised, technology-led mandate.”

Philippa Maffioli, Senior Advisor at Blyth-Richmond Investment Managers, said: “We should look at smaller investment trusts because they provide greater diversification within a portfolio and give investors access to innovative, informed managers with years of experience. MIGO Opportunities Trust is a great example. Manager Charlotte Cuthbertson runs a disciplined, discount-aware process and I rate her highly. It also gives investors access to specialist and smaller trusts I would not normally buy directly, while keeping sensible position sizes. The main risks are discount volatility and liquidity in smaller holdings.

“Similarly, Montanaro UK Smaller Companies invests in a sector where companies remain under-researched, which can create bargain opportunities for managers who do the work. Montanaro’s team, led by Charles and Adam Montanaro, backs high-quality growth businesses and supports that with detailed analysis and regular company meetings. I like it as a long-term capital growth allocation because most portfolios benefit from some small cap exposure. The risks are higher volatility, slower liquidity and periods of reluctance to invest in the small cap sector.”

Callum Stokeld, Vice President, Research Analyst, Investment Funds at Panmure Liberum, said: “With my first suggestion, smaller companies specialist Strategic Equity Capital, the closed-end nature of the fund gives it the ability to hold positions without reference to flows into or out of the fund. This means it can maintain exposure whilst engaging with management to help realise shareholder value. It also means it has the capacity to hold smaller, less liquid companies, and often become a very significant shareholder in them.

“We can see this in the current portfolio, where the manager holds significant positions in Trufin and Diaceutics. In both these companies, the trust manager Gresham House is the largest independent shareholder, leaving the trust well placed to push for shareholder friendly initiatives at these companies. This is a key differentiator, since it is able to invest in attractive companies which may fall below the liquidity radar of larger peers.

“Another trust, Geiger Counter, is a fascinating proposition. Debate will continue over investments in AI, but capital expenditure in the sector will be huge in the coming year irrespective of wider stock market performance. This implies huge requirements for energy production. This is already well known, but it is worth reiterating as we see strong support for growth in the use of nuclear power as a clean energy source able to supply reliable baseload capacity. We have already seen numerous countries returning to nuclear power, and plants being commissioned or reopened (including the announcement in December that the largest power plant in the world, in Japan, would reopen).

“The trust invests in a range of assets in the uranium sector and although physical uranium is not openly traded, we have seen estimates of uranium prices moving higher, coinciding with a significant pick up in contracting activity late last year, with mine supply forecast to be insufficient to meet existing demand, let alone when the pipeline of future demand is included. The closed-end structure has meant the manager has been able to take a long-term approach, including pre-production assets, and should leave it well placed to benefit if we see further support for the underlying commodity.”

Shavar Halberstadt, Research Analyst at Winterflood Securities, said: “While still relatively small at present, M&G Credit Income has grown through new share issuance over the last few years, including around £47m of new shares last year as investors have rightly taken notice of its unique offering. The fund aims to deliver high yield returns while taking investment grade risk. As at 30 November, the portfolio had a 7% yield to maturity. While other debt trusts may deliver higher returns in an average year, this is a good option for investors who want to see a widely diversified portfolio with an emphasis on risk mitigation, and the fund is well positioned to take advantage of any market dislocation.”

Saftar Sarwar, Chief Investment Officer at Binary Capital, said: “Develop North combines a strong yield and an opportunity for capital growth in property assets in the North East of England and Scotland. With more popular property markets fully priced with less than attractive yields, Develop North is an interesting opportunity. The yield of around 6% is fully covered and the trust trades on an approximate 10% discount to net assets.

“Crucially, the management has good local knowledge, and investment trusts that can deploy capital selectively, recycle assets and avoid forced selling are well positioned. For long-term investors seeking differentiated income, asset backing and exposure away from crowded public markets, this strategy is appealing.

“Similarly, Schroder British Opportunities presents an interesting upside opportunity, particularly following its recent change to an exclusive private equity focus. This is an important realignment towards an asset class where genuine outperformance can be achieved, away from the volatile public market.

“The UK private market, often overlooked by generalist investors, offers an interesting ground for growth capital and buyout opportunities. This trust, with its unique access to Schroders Capital’s deal flow, is positioned to exploit this. The resilience demonstrated by its private holdings – predominantly UK software and services companies – could be a positive sign going forward. The trust also trades on a large discount to net assets, and offers a differentiated edge in accessing high-quality, unlisted British businesses, translating into compelling long-term returns through active market engagement.

“Finally, CQS Natural Resources Growth & Income’s stellar performance in 2025, with returns of over 100%, may not be a transient phenomenon; it could reflect a deeper narrative. The world’s insatiable demand for critical minerals and energy, driven by energy transitions, major technological advancements and geopolitical realignments, provides a robust, long-term tailwind. The trust’s focus on a diversified portfolio of mining and resource equities, coupled with a commitment to income generation, offers the potential for capital appreciation and resilient cash flows.”

More information about these investment trusts, including performance information, is available on theaic.co.uk.

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Notes to editors

1. The Association of Investment Companies (AIC) represents a broad range of investment trusts and VCTs, collectively known as investment companies. The AIC’s vision is for closed-ended investment companies to be understood and considered by every investor. The AIC has 278 members and the industry has total assets of approximately £266 billion.
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