UK smaller companies: reasons for optimism

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  • 07 mins 35 secs

Learning: Unstructured

Author: Robin West, Fund Manager

Central banks continued to raise interest rates during the third quarter in an attempt to dampen inflation. Although inflation remains high, there are signs we may be near the peak.

The UK equity market is currently trading well below its historic valuation trading range, making it one of the cheapest global markets, and many small companies have seen their share prices fall significantly to trade at valuations around those reached in the global financial crisis.

Therefore, despite the headwinds that the UK economy currently faces, Robin believes there are reasons for optimism within the UK smaller companies sector.

Recorded on 13 October 2022

In his Q3 video update, Robin reflects on the quarter and answers the following questions:

  • 00:16 - What has been happening in the UK markets over the quarter?
  • 02:20 - What is your view on inflation and the impact on businesses in which you invest?
  • 02:59 - How did the Trust perform over the quarter?
  • 04:12 - What changes have you made to the portfolio over the quarter?
  • 05:25 - What is the outlook for UK smaller companies?

Investment risks

The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.

The Invesco Perpetual UK Smaller Companies Investment Trust plc invests in smaller companies which may result in a higher level of risk than a product that invests in larger companies. Securities of smaller companies may be subject to abrupt price movements and may be less liquid, which may mean they are not easy to buy or sell.

The use of borrowings may increase the volatility of the NAV and may reduce returns when asset values fall.

The Invesco Perpetual UK Smaller Companies Investment Trust plc uses derivatives for efficient portfolio management which may result in increased volatility in the NAV. In addition, some companies are suspending, lowering or postponing their dividend payments, which may affect the income received by the product during this period and in the future.

Important information

For professional clients in the UK only and not for consumer use.

All information correct as at 13 October 2022 unless otherwise stated.

This is marketing material and not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication.

Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice.

For more information on our investment trusts, please refer to the relevant Key Information Document (KID), Alternative Investment Fund Managers Directive document (AIFMD), and the latest Annual or Half-Yearly Financial Reports. This information is available on our website.

Further details of the Company’s Investment Policy and Risk and Investment Limits can be found in the Report of the Directors contained within the Company’s Annual Financial Report.

Issued by Invesco Fund Managers Limited, Perpetual Park, Perpetual Park Drive, Henley-on-Thames, Oxfordshire RG9 1HH, UK. Authorised and regulated by the Financial Conduct Authority.

EMEA 2579841 /2022

Channel: Invesco


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