Are narrowing small-cap discounts a signal to sell?

Mixed fortunes for UK Smaller Companies and UK All Companies

clock • 5 min read

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...

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