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'Inexorable' digital tide boosts River & Mercantile trust

'Inexorable' digital tide boosts River & Mercantile trust

Investments in companies exposed to the digital economy were key to the performance of the £103m River and Mercantile Micro Cap investment trust.

The trust returned 63 per cent in the year to 30 September, compared with 23 per cent for the average trust in the AIC UK Smaller Companies sector in the same time period.

It aims to keep its net asset value at around £100m, rather than grow to a size that would preclude it from investing in the smallest companies on the UK market.

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Philip Rodrigs, the trust's manager, said the year saw a number of the portfolio's micro-cap firms achieve "transformational" increases in earnings power and market appreciation.

He said: "Several holdings are benefiting from the inexorable tide of digitisation including some in the specialist area of big data. The top contributor enjoys all of these features which help to explain Blue Prism's 251.8 per cent increase in value.

"Very strong accelerating demand propelled the shares during the period as firms rapidly embrace digitisation of their workforce and are choosing Blue Prism's industry leading 'software robots'.

"Whilst early stage, Blue Prism could be at the forefront of a seismic shift in productivity and this is attracting international attention."

Blue Prism is also the trust's largest holding, representing 6.3 per cent of the portfolio followed by mobile advertising technology company Taptica, which also provided the second-largest contribution to the trust's returns.

The tenth-biggest holding in the portfolio was AFH Financial Group, the Aim-listed financial advice consolidator.

Mr Rodrigs said: "The favourable outlooks for many economies around the world contrasts with the subdued outlook for the UK economy as a result of Brexit which formally commenced this period.

"However, the performance of the company should be taken as definitive proof that the UK micro-cap universe provides a vast range of choice allowing the possibility to achieve zero exposure to UK domestic cyclicals."

The River and Mercantile UK Micro Cap trust trades at a 7.6 per cent premium to its net assets.   

david.thorpe@ft.com