Investors who want to tap into the rich seam of UK small cap opportunities will struggle to find a more passionate advocate than Georgina Brittain. The seasoned fund manager has been running the JPMorgan Smaller Companies Investment vTrust (JMI) since 1998, and alongside co-manager Katen Patel since 2017.

The smaller companies space has always struggled for analyst coverage yet the manager’s of the trust see this as an opportunity, not a hindrance, offering far greater potential to spot for growth being mispriced by the wider market. What JPMorgan Smaller Companies is looking for are between 60 and 120 stocks which the managers believe exhibit superior value, quality and operational momentum characteristics when compared to the wider stock universe.

This stock-led, bottom-up approach to portfolio construction benefits from the vast resources of JPMorgan Asset Management and a variety of quantitative and qualitative tools (including ratios such as return on equity, price to earnings, enterprise value to earnings before interest, tax, depreciation and amortisation, anticipated growth rates, and measures of financial strength), creating a balanced but pragmatic portfolio that would suit most investors. The dividend yield stands at around 1.3%.

Media business Future (FUTR), pharmaceutical services company Ergomed (ERGO:AIM) and fancy home furnishings firm Dunelm (DNLM) are its current biggest three holdings. Games Workshop (GAW), CMC Markets (CMCX), Team 17 (TM17:AIM), Luceco (LUCE) and SDI (SDI:AIM) are other top stakes readers may familiar with.

Brittain and Patel are currently having to juggle a torrent of opportunities, saying that the opportunity for UK investors away from the blue-chips is, at this point, like nothing Brittain has seen before in her lengthy career. ‘We are in sell to buy mode, literally crawling through the portfolio looking for things we can bear to let go so we can raise money to add others,’ she said.

Performance has been impressive despite the UK remaining stubbornly out favour with many investors since the Brexit vote in 2016. JPMorgan Smaller Companies has generated net asset value (NAV) and share price total returns of circa 103% and 125% respectively over the five years to 20 August 2021, representing strong outperformance of the Morningstar UK Smaller Companies peer group weighted average performance, with equivalent NAV and share price total returns of 62.7% and 72.7%, yet the discount to NAV remains nearly 6%.

The trust’s charges are not overly steep, with ongoing charges of 1.01% at a slight discount to the unweighted average of the AIC UK Smaller Companies sector of 1.08%. This is inclusive of management fees of 0.75% of the first £200 million on gross assets and 0.65% thereafter.

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