Cheap and unloved no more? SJP, Courtiers and AJ Bell lean into smaller companies as Q3 rewards mid-caps

UK fund buyers are edging back towards smaller companies. St. James's Place (5 October) moved c.£70m in Polaris Multi-Index from index-oriented emerging-market exposure into small-cap equities, increased smaller-companies allocations across the Polaris range and raised UK equity weights in Polaris Multi-Index and InRetirement. Courtiers' Multi-Asset funds "built a new position in the FTSE 250 index" in the third quarter, funded from the FTSE 100| "they look really cheap," said Asset Management Director Jacob Reynolds. AJ Bell added Artemis SmartGARP Global Smaller Companies to its Favourite Funds list (1 October), dropping abrdn Global Smaller Companies, which "has failed to keep pace with both peers and its benchmark over recent years".

However, investors confidence in recent years has been low for the sector. Calastone shows UK-focused equity funds shed £708m in September – "the 63rd month in the last 65 to see net selling" – and the Investment Association recorded £615m of UK equity outflows in August. Consolidation continues in the trust sector too, with Aberdeen UK Smaller Companies rolling into JPMorgan UK Small Cap Growth & Income.