A coronavirus put option paid off for Gervais Williams with his Miton UK Microcap investment trust significantly outperforming in the year to date compared to the FTSE Small Cap index.
In the period to 1 September, the £53.6m investment trust returned 19.1% on a net asset value basis, while the FTSE Small Cap (ex investment trusts) index fell 19.9% over the period, according to a trading update published Thursday morning. Unfortunately, the investment trust’s share price did not keep pace, rising a mere 4.2%.
The investment trust currently has a discount of 14.4%, wider than the 10.2% average it’s been trading at over the last 12 months, according to Hargreaves Lansdown data.
A FTSE 100 put option had enhanced returns in the first part of the year, according to the trading update. The sharp fall in markets allowed Williams to sell the option for a multiple of its book cost and then use the proceeds to fund investments “when many valuations were standing at unusually low metrics”.
This enhanced the investment trust’s participation in the subsequent stock market recovery, the update said.
Despite the strong performance in the year to date, the Miton UK Microcap board said it would be trimming fees, in part due to the wide discount, but also because of the investment trust’s ongoing charges. The annual management fee therefore dropped from 1% of NAV to 0.9% from the start of this month.
Miton UK Microcap Trust performance (%)
| 3m | 6m | 1yr | 3yr | 5yr | |
| Miton UK Microcap Trust | 5.83 | 22.75 | 14.98 | -11.60 | 2.29 |
| IT UK Smaller Companies sector | 3.47 | -6.04 | -5.85 | -3.66 | 28.03 |
