Fund Research

River & Mercantile UK Micro Cap

Last update 09 September 2019

Material produced by Kepler Trust Intelligence should be considered as factual information only and not an indication as to the desirability or appropriateness of investing in the security discussed.

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Investment objective

The trust aims to achieve long-term capital growth from investment in a diversified portfolio of UK micro cap companies, typically comprising companies with a market cap of less than £100 million.

As at:

30/08/2019

Group/Investment

River & Mercantile UK Micro Cap

Ticker

RMMC

Management Company

River & Mercantile

Manager Name

George Ensor

Association of Investment Companies (AIC) Sector

UK Smaller Companies

12 Mo Yield

0.0%

Dividend Distribution Frequency

None

Latest Market Capitalisation

£71,757,591

Latest Net Gearing (Cum Fair)

-

Latest Ongoing Charge Ex Perf Fee

1.25%

Turnover Ratio

20.5%

Shares Outstanding

46,445,043

(Discount)/ Premium (Cum Fair)

-20%

Daily Closing Price

154.5p

Source: Morningstar

River & Mercantile UK Micro Cap (RMMC) aims to achieve long-term capital growth from investment in a diversified portfolio of UK micro-cap companies, typically comprising those with a market cap of less than £100 million at the time of purchase.

The company launched in December 2014, with George Ensor having taken over as manager from Philip Rodrigs in 2018. George looks to utilise an active, bottom-up strategy looking to add real value in the micro-cap end of the market via in-depth analysis where coverage is sparse. Like all managers at River & Mercantile, George follows the group’s PVT (Potential, Valuation, Timing) investment approach (see portfolio section).

As of the end of June 2019 the portfolio is relatively concentrated, with only 43 holdings, but diversified by size and sector. Only financials have a weighting greater than 20%, and even the largest sector overweights, oil & gas and health care are relatively low at +6.5% and +5.4% respectively.

Performance has been varied since George took over the portfolio in a difficult period for UK small cap managers. Initially, performance was strong and for much of 2018 the trust outperformed the benchmark and peers alike. However the trust saw its returns hit hard in Q4, ruining what might have otherwise been a strong start for the new manager. Since then, to 28 August 2019, the trust has returned 6.6% marginally underperforming the benchmark (6.9%) and trailing the AIC peer group (9.5%).

As with most UK focused trusts, the past few years have seen the discount widen dramatically – although in this case, exacerbated by the change in manager in early 2018. Over the past two years the trust has reached a premium of close to 17%, and a discount of over 20%. Currently the trust is trading at a discount of around 20%, considerably wider than the sector average of 9.2%.

Find out how the managers take advantage of systematic biases and mistakes of the market...
Thomas McMahon

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Fund History: River & Mercantile UK Micro Cap

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