The uncertainty of Brexit has acted as a significant drag on the UK stock market which is still below the levels reached in 1999. Despite the recent run it is still relatively cheap when compared with the international markets.
Also over recent years growth and momentum investing have been much more successful strategies to follow with the Baille Gifford stable leading the pack.
However I have a feeling that the tide may be turning for a value approach.
With this in mind I have been looking at two UK small cap biased ITs managed by Aberforth who are dyed in the wool value fund managers and a UK mid cap fund managed by Andy Brough.
Aberforth Smaller Companies IT (ASL) has struggled with the value approach over the last year. NAV has gone down by 15% and similarly so has the share price. However the recently released yearly figures show that the first quarter was their worst performance ever but the last quarter was considerably better.
Picking good quality value companies may finally be starting to pay off.
ASL is on a discount of 8.8% which has been narrowing and pays a dividend of 2.6% (ex dividend in 2 days - 11th Feb).
The managers also manage a second IT fund – Aberforth Split Level Income Trust (ASIT). This IT has very similar constituents to ASL with 78% invested in UK smaller companies.
The split level structure means that the ordinary shares are effectively geared at around 40%. For this extra risk the dividend yield is 6.6%.
Also interestingly the discount has been widening since the start of the year and is now at 15%. Again they go ex dividend in 2 days (1.3% the bigger proportion in August).
I have added some ASIT to my portfolio.
For greater exposure to the UK mid caps I have also added Schroeder UK mid caps IT run by Andy Brough.
It is currently on a discount of 8.3% and with a dividend of 2.2%.
The fund is a mixture of UK growth and value.
Around 40%/12% in mid cap growth/value and 12%/15% small cap growth/value.
Here is a recent interview with him on PI World:
https://www.piworld.co.uk/2021/01/29/pi ... dy-brough/
Are others of a like mind? If not I might also be a contrarian investor
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Regards
Iron