TRUST WATCH: Montanaro UK Smaller Companies Trust

MONTANARO UK SMALLER COMPANIES: Industrials-focused fund aims for growth over income

What is it?

The Montanaro UK Smaller Companies Trust invests in small firms listed on the London Stock Exchange and the junior market AIM. 

Managed by Charles Montanaro, who founded and owns the parent investment firm, it aims to grow investors’ money rather than focus on giving them an income.

What does it invest in?

Its biggest exposure is to the industrials sector. Top ten holdings include investment software firm Integrafin, components manufacturer Discoverie Group and vets supplier Dechra Pharmaceuticals.

What do the experts like?

Dewi John, head of Lipper Research at Refinitiv, points out that while smaller companies tend to be under-researched by analysts, the trust has a well-resourced team to do its own research.

Any downsides?

John adds: ‘Given the UK economy’s relative weakness through Covid, and the renewed uncertainties of Brexit, smaller companies face a challenging time. 

Montanaro’s more concentrated portfolio than most of its UK Small Companies peers could mean less diversification, and so greater risk.’