It has been a buoyant start to 2021 for UK small caps, with the FTSE Small Cap Index +6.8% in the first quarter, far outpacing its large cap brother, the FTSE All Share, which was +4.0%.

The Fund also enjoyed a strong start to the year, up 4.7% at the time of writing.

It was a particularly positive few months for our more cyclical and UK-focused investments, such as Young’s, the pub company, Redrow, the house builder and Greggs, our favourite purveyor of sausage rolls. After the double-whammy of Brexit and COVID-19, it is heartening to see these businesses bouncing back and proving the naysayers wrong. I am sure readers will agree that it has been lovely to see the restaurants, shops and pubs beginning to fill up again and lets all hope that it is for good this time. The hypothetical UK consumer has a year worth of extra savings in their bank accounts and I strongly suspect that a handsome chunk of this will be spent on enjoying life in summer 2021 – this will be a welcome boost to the economy and we suspect that markets are still not pricing in just what a fillip this could be for UK stock markets.

During the first quarter, we added two new names to the Fund, GB Group and Trustpilot. GB Group is a data business specialising in identity verification and fraud protection. If you have ever used your credit card overseas, then there is a high likelihood that your bank used GB Group to verify the transaction. GB Group shares sold-off briefly in early-March and we used the opportunity to initiate a position in this high quality and growing business. We also took part in the Trustpilot IPO in March. We like that Trustpilot, the online review site, is a global platform with high user engagement and customer loyalty. Trustpilot sits alongside other platform businesses IntegraFin and Trainline in the portfolio.

In order the fund these purchases, we sold the last of our Aberforth Smaller Companies Investment Trust. We made this purchase in the market depths of March 2020, and were happy to book a profit on the position and recycle the cash back into the portfolio.

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