The main objective of the Rensburg UK Micro Cap Growth Trust is to provide a total return (i.e. capital gain and income) in excess of the total return achieved by the FTSE SmallCap Index, (ex Investment Companies), over the medium to longer term.
October proved to be a truly dreadful month for equities on a global basis and, apart from cash (which represents 18.6% of the fund at the month end) there was nowhere to hide for those with equity fund mandates. Against this backdrop smaller companies, particularly at the smallest end of the spectrum, were shunned and the extent of the complete lack of support for the asset class is evident but the 20.1% fall in the FTSE Small Cap Index.The fund performed considerably better than the benchmark but despite this, the units were 16.2% lower that a month earlier. Following the extraordinary events in September, where significant alterations were made to the world financial system, October proved to be equally momentous as numerous policy responses by government and central banks were made in rapid succession, starting with the Troubled Asset Relief Programme (TARP) passed by Congress on 3 October.There is a growing view that the financial authorities will do everything in their power to alleviate tightening credit conditions and to avoid a severe contraction in the major economies. In terms of the UK, GDP fell by 0.5% in the 3rd Quarter,the first fall since the 1990's,and the labour market continued to weaken.The emergency 0.5%rate cut by the MPC surprised the market and remarks that data showed that the economic outlook had deteriorated sharply,did little to encourage equity players.However, it did indicate that the Bank of England may be more aggressive in cutting interest rates than in the past. Virtually every stock fell during the month as support for small caps evaporated. Our best contributor, London Capital Group, fell by "only" 3.4% followed by Pressure Technologies, recently upgraded by analysts, which lost 6.4%. Activity in the fund was very limited and with 80% plus of the fund invested we intend to retain our liquidity only for the highest conviction calls.
1.33p
