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River and Mercantile UK small cap trust outperforms

River and Mercantile UK small cap trust outperforms

River and Mercantile’s UK Micro Cap Investment trust has outperformed its benchmark, despite the small company sector being hit by the Brexit vote.  

The investment firm saw its £93m trust scoop up a 14.4 per cent return for the year ending 30 September, outperforming the Numis Smaller Companies + AIM (ex ICs) benchmark, which returned 10 per cent over the same period.

According to a market update published today (20 January), the trust saw its net asset value per share reach a low of £1.05 over the course of the year, and a high of £1.23.

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However, the trust's chairman Andrew Chapman said it was “frustrating” that the Brexit vote meant the River and Mercantile trust traded at a discount for the first time in its two-year history. 

According to a market update published today (20 January), the investment company saw its net asset value per share reach a low of £1.05 over the course of the year, and a high of £1.23.

Mr Chapman said the market has had to deal with a series of shocks, with the huge slump in global markets in January last year, followed by a gradual return to normality.

Yet he said investors have had a “wary eye” on the prospect of another huge setback rippling across global markets, largely because of the UK's vote to leave the European Union.

“We are now in unknown territory and while there is a nervous enthusiasm, fear of the shock is not far away,” he said.

The chairman pointed out that, while the FTSE 100 – with its exposure to non-sterling earnings – recovered, the domestic smaller cap firms fared less well.

“This is, of course, the area of the market where our company operates and, as a result, the impact on the net asset value was swift,” he said.

“This is galling for all investors and we are working with our brokers to examine ways that we can look to control this going forward.”