Suits investors looking for long-term capital growth from UK smaller companies. The company is classed as 'slightly above average' in terms of risk and therefore investors will need to be prepared for some volatility over time.

The Trust invests in UK smaller companies, with the aim of maximising total returns through a dedicated stock-picking approach.

• The Trust invests in companies exclusively listed in the UK.
• Only about half of the earnings of companies in the portfolio are generated in the UK, the rest is split between the US, Europe and Asia.
• The portfolio is managed on a stock picking basis and is heavily weighted in favour of mid cap stocks where the manager sees good growth opportunities. 

• Most of the investments in this portfolio are in smaller companies shares. They may be more difficult to buy and sell and their share price may fluctuate more than that of larger companies.
• If a fund is a specialist country-specific or geographic regional fund, the investment carries greater risk than a more internationally diversified portfolio. Full details of risks.

The UK equity market rose during April. This marks the eleventh consecutive month of positive performance from the FTSE All-Share Index. The rise in the equity market was driven by outperformance of defensive sectors such as utilities and food producers with miners continuing to underperform sharply. Economic news was mixed but supportive central bank reflationary action boosted equities. Corporate trading updates, however, were mixed with a number of earning warnings from UK companies, particularly in the industrial sector. The FTSE All-Share Total Return Index rose 0.6% with mid and small caps underperforming as the Numis Smaller Companies ex-Investment Companies Index fell 0.2%. The Trust, by comparison, underperformed the benchmark, with a fall of 1.6% over the month.

Positive contributors to performance included Countrywide (estate agent), which rose 19.4% as investors became optimistic about the potential for a recovery in UK housing market transactions. Senior (aerospace and industrial group) rose 7.0% as the company released a positive trading statement indicating trading was progressing satisfactorily. Less helpfully, Spectris (electronic instrumentation) fell 14.1% after the company issued a profit warning highlighting weak trading in the first quarter of 2013.

We took a new position in Mears (building maintenance services) as the company raised new funds to expand their healthcare support services division. We also increased our position in Carphone Warehouse (retailer of mobile phones and devices) as we thought the company was valued attractively given solid growth prospects. To fund these purchases we sold our position in Debenhams (department store retailer) as the company highlighted the pressure on store profitability as sales migrate online.

Neil Hermon
April 2013