The £20m CT UK Smaller Cap fund and £28m Aviva Investors UK Smaller Companies fund are both to be closed in the coming months. The former will close its doors on 6 June while the latter is to shut on 10 May.
UK small-caps have had a torrid time of late, with investors moving away from riskier assets in favour of defensive holdings such as bonds and cash, which now offer attractive returns thanks to higher interest rates.
This, along with economic uncertainty surrounding inflation and geopolitical tensions around the world, has caused investors to take a more cautious approach.
While some believe better times are ahead, Columbia Threadneedle and Aviva have thrown in the towel on their funds.
CT UK Smaller Cap, managed by Catherine Stanley since 2004 and Patrick Newens since 2019, was originally launched in February 1988 and has been one of the best performers in the IA UK All Companies sector over three years, making an 11.5% loss. Over 10 years the fund has made 78.6%, placing it in the second quartile of the sector.
However, the fund has failed to accumulate significant assets under management (AUM), with its total assets peaking in2021 around £33m.
Conversely, the Aviva Investors UK Smaller Companies fund has struggled over the long term, with a return of 60.5% over 10 years and has fared even worse over three years, down 25.4%.
Trevor Green has managed the fund since 2014 and was joined by co-manager Charlotte Meyrick in 2017. The fund pre-dates both however, having been initially launched in 1998. Assets under management reached £66m in July 2021 but have slipped back to the £28m in the fund at present.
A spokesperson for Aviva Investors said: “To ensure our fund range remains efficient, of high quality and provides the best outcomes for our clients, we regularly assess the value offered by our funds. This assessment process has led us to take the decision that it is in the best interests of investors to close the fund.
“The fund possessed a relatively small AUM and as such we would expect the broader impact of this decision to be very limited. The announcement has already been communicated to clients.”
Investors will have the option to switch into another Aviva Investors fund free of charge or to receive the proceeds of the sale of their investment as cash.
A spokesperson from Columbia Threadneedle Investments said: “We keep our range of funds under regular review and are committed to offering investors the best possible opportunities and value for money.
“Following a recent review, we have decided to close the CT UK Smaller Cap fund. The fund has experienced a fall in assets and became too small to run as efficiently as we would wish. We believe the closure of the fund is in the best interests of investors.”
Please note, a previous version of this article stated the CT UK Smaller Companies fund managed by James Thorne was to close. This was incorrect and the article has been amended accordingly to reflect the closure of the CT UK Smaller Cap fund.