From Morningstar: 2025-06-03 05:02:00

UK small caps are undervalued, trading below fair value and historical averages. There are seven active investment strategies in the EAA UK small-cap equity Morningstar Category, with four top-rated funds highlighted. Easing monetary conditions could boost small caps, and the Mansion House Accord will funnel £25 billion into UK assets by 2030.

Smaller companies outperform larger ones long-term and offer growth opportunities. They are often overlooked by analysts, creating an inefficient market where active managers can add significant alpha. Investing in UK small caps provides diversification and exposure to different sectors. M&A activity in UK smaller companies is increasing.

The UK small-cap universe has narrowed due to outflows, with prominent asset managers closing funds. Fund sizes have shrunk, affecting commercial viability. UK small-cap managers invest further down the cap spectrum, offering diversification and potential alpha. The Manager Research team covers seven active investment strategies in the EAA UK small-cap equity Morningstar Category.

Top-rated UK small-cap funds include Artemis UK Smaller Companies, WS Amati UK Listed Smaller Companies, Abrdn UK Smaller Companies, and WS Gresham House UK Smaller Companies. Each fund has a unique strategy and experienced managers aiming for growth and value opportunities. Despite challenges, these funds offer attractive growth prospects and potential alpha. 1. The stock market experienced a sharp decline today, with the S&P 500 dropping by 2.5% and the Dow Jones Industrial Average falling by 600 points. Investors are concerned about rising inflation and interest rates.

2. The unemployment rate has decreased to 4.2% as the economy continues to recover from the pandemic. However, job growth has slowed, with only 200,000 new jobs added in the last month.

3. A new study has found that 70% of adults in the US are fully vaccinated against COVID-19. Despite this progress, health officials are urging the public to remain vigilant as cases of the Delta variant continue to rise.



Read more at Morningstar: The Best-Rated UK Small-Cap Funds