Highly-regarded investment trust JPMorgan UK Small Cap Growth & Income (LON:JUGI) lagged its benchmark in the year to July 2026. This rare bout of underperformance was largely due to the portfolio’s underweight position in basic materials.
Nevertheless, ‘JUGI’ remains first quartile and managers Georgina Brittain and Katen Patel continue to find ‘compelling opportunities’ within the fund’s large investment universe.
‘We remain geared, as UK mid and small caps remain very cheap relative to their own history, and relative to the FTSE 100,’ said the managers in today’s results statement.
They added that further evidence of the undervaluation of the smaller end of the UK market is provided by ‘the amount of M&A activity that continues to take place (both corporate buyers and private equity), and the number of companies initiating share buybacks due to their cheap equity. We firmly expect both of these themes to continue.’
Formidable long-run record
While FY26 results showed a NAV (net asset value) total return of 7.2% versus the 9.8% total return from the benchmark, JUGI’s share price total return was better at 9.1%. This was driven by a narrowing of the NAV discount from 9.5% to 8.2%.
| AIC UK Smaller Companies Sector | 1-yr share price total return (%) | 5-yr share price total return (%) | 10-yr share price total return (%) |
| Rockwood Strategic | +6.6 | +102.7 | +383 |
| JPMorgan UK Smaller Companies Growth & Income | +12 | +6.6 | +200.6 |
| Aberforth Smaller Companies | +26.8 | +48.4 | +149.5 |
| River UK Micro Cap | +27.8 | -7.4 | +128.8 |
| Strategic Equity Capital | +7.3 | +43 | +116 |
Source: The AIC/Morningstar
And over 10 years, JUGI’s cumulative NAV total return of 159.9% and share price cumulative total return of 211.2% are both significantly ahead of the benchmark’s 69% haul.
The £420 million cap trust remains first quartile versus small cap peers over three, five and 10 years.
Winners and losers
During FY26, positive stock contributors included Lion Finance (LON:BGEO), previously named Bank of Georgia. Other winners were specialist contractor Keller (LON:KLR) and Applied Nutrition (LON:APN), the sports nutrition brand bought at IPO almost two years ago.
JUGI also benefitted from takeover bids for JTC, Mitie (LON:MTO) and Pinewood Technologies. Key detractors included the holding in Cerillion (LON:CER), as well as not owning Greatland Resources (LON:GGP) or Pan African Resources (LON:PAF).
Compelling opportunity set
Katrina Hart, chair, commented: ‘UK smaller companies remain attractively valued and offer a compelling opportunity set. While near-term uncertainty persists at a market level, the company’s active approach, strong long-term track record, and disciplined capital management leave it well positioned to deliver attractive capital growth and a reliable income stream for shareholders.’
Despite this rare performance blip, we remain big fans of JUGI. The trust is among the best 10-year share price total return performers in the AIC’s UK Smaller Companies sector and has an attractive ‘enhanced’ dividend policy.
JUGI’s strategy, which focuses on value, quality and momentum factors, aims for ‘repeatable alpha generation’ across a variety of market conditions. And under the stewardship of Brittain and Patel, JUGI has delivered positive long-term outperformance of the benchmark over the past 10 years.
A planned merger with Aberdeen UK Smaller Companies Growth Trust (LON:AUSC) will enable both sets of shareholders to benefit from better liquidity and a reduction in charges. This is JUGI’s second consolidation in the last three years, having also absorbed sister trust JPMorgan Mid Cap in 2024.
Once the merger completes, JUGI will be one of the largest funds in the AIC sector. And by dint of its size, the trust should garner greater attention from wealth managers and private investors.
