Gervais Williams' trust underperforms sector

The trust, managed by Gervais Williams and Martin Turner, posted a total return of 17.3 per cent compared with the UK Investment Trust Smaller Companies sector which saw an average return of 27.9 per cent over the same period.

In an update the managers said the UK’s decision to leave the European Union and the price appreciation among some growth stocks on the Aim had been “major drivers” of returns.

They said: “The extra uncertainty after Brexit led investors to adopt a more cautious stance to domestically focused stocks.

“This, alongside a slowdown in world growth, has increased investor enthusiasm for the growth stocks including many of those listed on the Aim exchange, with several moving onto relatively high forward looking valuations.

“As the sterling exchange rate bottomed out and it staged a recovery from January onwards, this has led to many domestic companies enjoying a degree of performance catch-up.

“The Nav of the company therefore rose by 17.3 per cent over the year, albeit that was still rather less than the return on the mainstream indices.”

The stock that added most to the portfolio return was IQE, which tripled in the year, with other notable outperformers including Fulcrum Utility Services, Fishing Republic and IG Design Group.

At the end of April, the trust had 128 holdings, with its largest exposure to the technology sector.

The managers added: “The company's strategy was put together with changing market dynamics in mind.

“Ultimately, we continue to identify plenty of microcap stocks with the prospect of an attractive cashflow from these kinds of investments going forward.

“These companies should be well positioned to generate a truly sustained rise in earnings and cashflow, from which we expect to deliver ongoing premium returns over time.”

The total assets of the trust amounted to £111.4m at the end of April and the ordinary share Nav rose by 17 per cent to 64.27p over the course of the year.

damian.fantato@ft.com