Montanaro UK benefits from quality focus

Montanaro UK benefits from quality focus – Over the year to the end of March 2020, Montanaro UK Smaller Companies Trust delivered an NAV return of -8.5%. This compares very favourably with a return of -25.9% on the Numis Smaller Companies Index. A narrowing of the discount from 18.0% to 11.2% meant that the return to shareholders was -0.3%. The dividend has been increased by 36% to 5.3p, in line with its new policy of paying four quarterly dividends each equivalent to 1% of NAV. The results statement confirms the board’s commitment to this policy.

This was the third consecutive year of outperformance from the trust. Over 10 years, its NAV returns are 50% ahead of its benchmark.

25 years after the trust was founded, Charles Montanaro has confirmed that he will continue to manage it for at least five more years.

The chairman attributes the success of the trust in this environment to the skill of the management team and the emphasis on investing in high quality companies. One of the attributes that the manager favours is a strong balance sheet. the team has been in touch will the companies in the portfolio and assessed, amongst other things, each company’s ability to access credit, if needed. The manager is also convinced that investors will focus more on the environmental, social and governance aspects of investment – an area that the team has incorporated into its investment process for many years.

[There are times in markets when investors throw caution to the wind and gamble on unproven business models and highly indebted companies. Trusts such as Montanro UK Smallers suffer by comparison. However, now its focus on quality is paying off handsomely. It is good to see that, after 25 years, Charles plans to stick around. He has been looking to the long term and expanding the team over the past few months, demonstrating the forward thinking that led Montanaro to be ahead of the curve n areas such as ESG.]

MTU : Montanaro UK benefits from quality focus


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