Are narrowing small-cap discounts a signal to sell?

Mixed fortunes for UK Smaller Companies and UK All Companies

Trust analysts have argued there is still value to be found in the IT UK Smaller Companies sector despite recent gains, with some well-known strategies trading on high single- or low double-digit discounts.

Since the UK voted to leave the European Union in June 2016, there have been concerns that UK equities - particularly those further down the market-cap spectrum and therefore seen as more domestic-facing - could be hit hard by sterling volatility and trade headwinds.  However, the IT UK Smaller Companies sector has returned on average 42% since the referendum, outperforming the FTSE All Share index by 13.8 percentage points. In contrast, the IT UK All Companies sector average has returned 28.23%, while the IT UK Equity Income sector is up 21.3%.  AIC data shows the average IT UK Sm...