Montanaro UK Smaller Companies (MTU) fund manager Charles Montanaro is feeling more bullish after his £181m investment trust posted better performance figures over the past year, with recent annual results showing underlying returns of 8.3% that were not far behind those of the trust’s benchmark, at 9%.
After apologising to shareholders a year ago for the trust suffering its worst three-year underperformance since launch in 1995 and dropping 12% in asset value in the previous financial year, Montanaro struck a more positive tone in this year’s annual results. He noted that falling inflation and interest rates could mean the return to a ‘normal’ period when smaller companies typically do well.
He said that after a ‘challenging’ period for small-cap stocks, recent supply chain challenges appeared to be normalising and companies were returning to their past ordering and stock patterns. The period of building up raw materials and finished goods ‘just in case’ appeared to be over as companies were coming to the end of a programme of destocking.