Second deal in three years: Aberdeen UK Smaller Companies Growth Trust will roll into JPMorgan UK Small Cap Growth & Income. Is JPMorgan emerging as the UK small-cap investment trust consolidator?

The board of Aberdeen UK Smaller Companies Growth Trust (AUSC) has chosen JPMorgan after a request-for-proposals that included the incumbent (RNS, 18 September). AUSC will roll into JPMorgan UK Small Cap Growth & Income (JUGI), with a cash exit at NAV less 2%, capped at 35% of the share capital. Votes come at JUGI's AGM, expected on 23 November, and completion is targeted by the end of 2026.

Over five years AUSC's portfolio fell 3% and shareholders lost 6% including dividends, against 27% for the Numis index (Scottish Financial News). Buybacks more than halved the trust. "This deal draws a line under the problems that have been steadily eroding AUSC's viability as a standalone vehicle," said Richard Williams, senior analyst at QuotedData. The buybacks left it "with reduced liquidity and an increasingly burdensome cost base", leaving the trust in "a vicious circle that was becoming difficult to break."

JPMorgan is cutting JUGI's fee to 0.60% on net assets up to £200m and 0.55% above, and waiving 12 months' fees on rolling assets. The enlarged trust's ongoing charges are expected at around 70bp. JUGI chair Katrina Hart: "This is JUGI's second consolidation in the last three years," after it absorbed JPMorgan Mid Cap in 2024, and "the Board's ambition is that JUGI is recognised as the pre-eminent investment trust investing in UK smaller companies." Richard Williams also added: "The bigger story, perhaps, is JUGI's emergence as a consolidator in the sector… it may not be its last deal."

What do allocators think of the deal? AJ Bell removed AUSC from its Investment Trust Select List on 1 October and is not adding a replacement "at this stage". Paul Angell wrote that JUGI's policy of paying 4% of NAV a year from income and capital makes it "a less straightforward selection" for small-cap investors seeking long-term capital growth. UK smaller companies remain on AJ Bell's Favourite Funds list through WS Gresham House UK Smaller Companies, so AJ Bell still sees value in the sector for its clients.