Increased demand for UK SMID trusts sees discounts narrow to tightest levels in three years

NAVs slumped throughout Q4 2018

The average discount on UK small- and mid-cap focused trusts has tightened to 6% - the lowest level seen since before the EU referendum in 2016 - following heightened demand in the wake of sharp share price falls at the end of 2018.

Many trusts in the AIC UK Smaller Companies sector and those listed as UK mid-cap funds in the UK All Companies sector saw their NAVs fall throughout Q4 last year as stockmarkets were beaten, with those more exposed to growth stocks hit the hardest. The £610m Henderson Smaller Companies trust, for example, saw its NAV total return fall by 19% during the quarter according to Stifel, as did the £320m BlackRock Throgmorton trust. In the former's half-year results released last week, manager Neil Hermon said he believes the UK economy is showing "anaemic growth" with UK consumers nervous ...