Struggling Aberdeen UK Smaller Companies Growth (LON:AUSC) has agreed to merge with the strongly-performing JPMorgan UK Small Cap Growth & Income (LON:JUGI) as the consolidation wave continues to sweep across the investment trust sector.
The enlarged trust will be managed by JPMorgan’s Georgina Brittain and Katen Patel, who’ve masterminded ‘JUGI’s’ exceptional long-term performance. On a NAV total return basis, JUGI has materially outperformed AUSC over the last one, three, five and 10 years.
And the merger will enable both sets of shareholders to benefit from better liquidity and a reduction in charges.
Why the urge to merge?
Following a ‘competitive private review process’ undertaken by AUSC, both boards believe the merger offers ‘the best outcome for AUSC’s shareholders as well as delivering meaningful benefits for existing JUGI shareholders’. AUSC shareholders will be entitled to roll their investment over into JUGI or elect for a cash exit.
AUSC sought a merger partner after effectively becoming sub-scale, having bought back more than half its shares over the last five years.
| NAV Total Return | 1-year | 3-years | 5-years | 10-years |
| AUSC | 0% | +23% | -25% | +69% |
| JUGI | +9% | +37% | -4% | +142% |
Source: Morningstar, Marex Financial, as at 16 September 2026
As Liz Airey, chair, explained: ‘This has ‘significantly reduced liquidity in the company’s shares and the board is concerned about the impact that ongoing share buybacks are likely to continue to have on the size and scale of the company, the liquidity in the company’s shares and the company’s ability to appeal to investors and grow over time.’
Abby Glennie and Amanda Yeaman took on AUSC after legendary small cap manager Harry Nimmo retired in December 2022. Unfortunately, subsequent performance has proved poor.
And Airey lamented that recent performance ‘remains below both the benchmark and a number of similar peers’.
Alpha generation
JUGI’s strategy, which focuses on value, quality and momentum factors, aims for ‘repeatable alpha generation’ across a variety of market conditions. Under Brittain and Patel, JUGI has delivered positive long-term NAV total return outperformance of +4.2% per annum above its composite benchmark over the last 10 years.
This strategy also makes good use of the investment trust structure through an enhanced dividend policy and the use of gearing to boost returns.
With 18 constituents and a modest average market cap of roughly £300 million, there are too many investment trusts in the UK Smaller Companies sector. As such, further consolidation of the sector seems inevitable.
We think the JUGI/AUSC merger looks sensible given the considerable overlap between the top shareholders of both trusts. This means eligible AUSC shareholders have the chance to consolidate their investments into a larger, more liquid fund.
Once the merger completes, beefed-up JUGI will be one of the largest funds in the AIC UK Smaller Companies sector. And by virtue of its size, it should garner greater attention from wealth managers and retail investors.
Winterflood’s Emma Bird commended the AUSC board for reviewing the fund’s future following a protracted period of underperformance and an entrenched discount. ‘We consider the proposed merger with JUGI as a positive outcome for AUSC shareholders,’ said Bird.
She explained shareholders will benefit from ‘continued exposure to a core, diversified portfolio of UK small caps via a larger, more liquid, lower cost vehicle with a much stronger performance record’.
QuotedData analyst Richard Williams said the merger demonstrates JUGI’s determination to build scale, having also absorbed sister trust JPMorgan Mid Cap in 2024. As Williams pointed out: ‘If greater scale translates into better liquidity and a more resilient rating, it may not be its last deal.’
