What’s next for UK small cap stocks?
Laura Foll, Co-Portfolio Manager of Henderson Opportunities Trust, talks about how UK small caps have performed year-to-date, which segments of the portfolio have performed well, and where she is finding attractive opportunities. Laura also outlines how the portfolio may benefit from the energy transition.
- UK small cap stocks, generally more cyclical and tied more closely to the economy, have underperformed their large-cap counterparts as the risk of a UK recession intensifies.
- The stabiliser portion of the portfolio consisting of larger companies (found on the FTSE 100 Index) and natural resource companies has performed well calendar year- to-date, benefitting from positive investor sentiment and higher commodity prices.
- The portfolio is positioned to benefit from both traditional natural resource companies (Serica Energy) and next generation energy providers (Ilika) that might play a part in the transition towards clean energy.
Please read the following important information regarding funds related to this article.
- If a Company's portfolio is concentrated towards a particular country or geographical region, the investment carries greater risk than a portfolio that is diversified across more countries.
- Some of the investments in this portfolio are in smaller company shares. They may be more difficult to buy and sell, and their share prices may fluctuate more than those of larger companies.
- This Company is suitable to be used as one component of several within a diversified investment portfolio. Investors should consider carefully the proportion of their portfolio invested in this Company.
- Active management techniques that have worked well in normal market conditions could prove ineffective or negative for performance at other times.
- The Company could lose money if a counterparty with which it trades becomes unwilling or unable to meet its obligations to the Company.
- Shares can lose value rapidly, and typically involve higher risks than bonds or money market instruments. The value of your investment may fall as a result.
- The return on your investment is directly related to the prevailing market price of the Company's shares, which will trade at a varying discount (or premium) relative to the value of the underlying assets of the Company. As a result, losses (or gains) may be higher or lower than those of the Company's assets.
- The Company may use gearing (borrowing to invest) as part of its investment strategy. If the Company utilises its ability to gear, the profits and losses incurred by the Company can be greater than those of a Company that does not use gearing.