View the latest insights from the Economic Advantage team.
VIew NowPast performance does not predict future returns. You may get back less than you originally invested. Reference to specific securities is not intended as a recommendation to purchase or sell any investment.
- Eagle Eye Solutions buoyed by positive start to enterprise software partnership.
- Kainos upgrades financial guidance as recent trading pickup continues.
- On The Beach shares weaken on trend for late holiday bookings
The Liontrust UK Smaller Companies Fund returned 1.0%* in September. The FTSE Small Cap (excluding investment trusts) Index comparator benchmark return was 2.4%, and the average fund in the IA UK Smaller Companies sector, also a comparator benchmark, returned 1.6%.
Equity market gains were aided by a US rate cut, which was increasingly priced into markets in the wake of data showing weaker than expected jobs creation. The Fed opted to cut by a quarter percentage point, its fourth cut since rates peaked in 2023, but the first in nine months. Having cut five times in the last 18 months, the Bank of England kept rates on hold in September.
Eagle Eye Solutions (+43%), the software-as-a-service (SaaS) provider to the retail and travel sectors, released full-year results reporting on a solid performance in the period to 30 June 2025, confirming the outlook for the new financial year, and including upbeat comments on the initial stages of the enterprise software partnership. Eagle Eye’s AIR platform for omnichannel personalisation of loyalty and subscription programmes will be embedded in the products of “one of the largest software providers in the world”. The initial product development milestones have been met and first customer contracts are expected towards the end of 2025.
Kainos Group (+34%) issued a trading update covering the period since 1 April, noting that it has seen a further sequential improvement in activity which builds on the solid performance in the first quarter of 2025. The outsourced provider of custom digital platforms and the Workday enterprise software suite now expects revenues for the year to 31 March 2026 to be at the upper end of consensus forecasts. Kainos is recruiting new staff across its three divisions as well as using contractors in order to support the improved growth outlook.
Craneware (+12%) reported on a year of strong growth in revenues, recurring revenues and earnings in the year to 30 June. The software provider to the US healthcare sector also commented that trading in the first few months of the new financial year has started well.
On The Beach (-24%) shares slipped after a trading statement for the year to 30 September guided to profit before tax in a £34.5 million to £35.5 million range, marginally below consensus expectations for £38.4 million. The company is seeing a trend towards holidays being booked at short notice, which is reflected in slower summer 2026 bookings. Nevertheless, the opportunity to grow through increasing its share of the more premium holiday package market and initiatives such as city breaks remains compelling.
Hilton Food Group (-20%) is a packager of meat, seafood, vegetarian, vegan and convenience food products for large grocery retail customers such as Tesco in the UK and Woolworths in Australia and New Zealand. A half-year trading update highlighted a couple of temporary headwinds which pulled the share price lower. In the UK its seafood performance has been adversely affected by cost inflation leading to softer demand for white fish, while in Europe, its smoked salmon business was impacted by regulatory restrictions on shipments to the US. It is a sign of the volatility within markets – and the unforgiving mood towards any negative news – that a low single digit earnings downgrade was met by such an extreme share price reaction in the short term.
Positive contributors included:
Eagle Eye Solutions (+43%), Kainos Group (+34%), Keystone Law Group (+17%), JTC (+15%) and Craneware (+12%).
Negative contributors included:
On The Beach (-24%), Hilton Food Group (-20%), Midwich Group (-18%), Arbuthnot Group (-14%) and Animalcare (-9.2%).
Discrete years' performance** (%) to previous quarter-end:
| Sep-25 | Sep-24 | Sep-23 | Sep-22 | Sep-21 |
Liontrust UK Smaller Companies I Inc | 1.1% | 8.3% | -1.6% | -28.9% | 46.9% |
FTSE Small Cap ex ITs | 6.4% | 22.4% | 12.7% | -24.4% | 72.4% |
IA UK Smaller Companies | 2.5% | 16.1% | 2.2% | -31.9% | 51.1% |
Quartile | 3 | 4 | 4 | 2 | 3 |
*Source: Financial Express, as at 30.09.25, total return (net of fees and income reinvested), bid-to-bid, institutional class. **Source: Financial Express, as at 30.09.25, total return (net of fees and income reinvested), bid-to-bid, primary class.
Understand common financial words and termsSee our glossary
KEY RISKS
Past performance does not predict future returns. You may get back less than you originally invested.
We recommend this fund is held long term (minimum period of 5 years). We recommend that you hold this fund as part of a diversified portfolio of investments.
- Overseas investments may carry a higher currency risk. They are valued by reference to their local currency which may move up or down when compared to the currency of the Fund.
- The Fund, may in certain circumstances, invest in derivatives but it is not intended that their use will materially affect volatility. Derivatives are used to protect against currencies, credit and interest rate moves or for investment purposes. The use of derivatives may create leverage or gearing resulting in potentially greater volatility or fluctuations in the net asset value of the Fund. A relatively small movement in the value of a derivative's underlying investment may have a larger impact, positive or negative, on the value of a fund than if the underlying investment was held instead.
- Credit Counterparty Risk: outside of normal conditions, the Fund may hold higher levels of cash which may be deposited with several credit counterparties (e.g. international banks). A credit risk arises should one or more of these counterparties be unable to return the deposited cash.
- Diversification Risk: the Fund is expected to invest in companies predominantly in a single country which maybe subject to greater political, social and economic risks which could result in greater volatility than investments in more broadly diversified funds.
- Smaller Companies Risk: as the Fund is primarily exposed to smaller companies there may be liquidity constraints from time to time, i.e. in certain circumstances, the fund may not be able to sell a position for full value or at all in the short term. This may affect performance and could cause the fund to defer or suspend redemptions of its shares. In addition the spread between the price you buy and sell units will reflect the less liquid nature of the underlying holdings. The Fund may invest in companies listed on the Alternative Investment Market (AIM) which is primarily for emerging or smaller companies. The rules are less demanding than those of the official List of the London Stock Exchange and therefore companies listed on AIM may carry a greater risk than a company with a full listing.
- ESG Risk: there may be limitations to the availability, completeness or accuracy of ESG information from third-party providers, or inconsistencies in the consideration of ESG factors across different third party data providers, given the evolving nature of ESG.
The issue of units/shares in Liontrust Funds may be subject to an initial charge, which will have an impact on the realisable value of the investment, particularly in the short term. Investments should always be considered as long term.
DISCLAIMER
This material is issued by Liontrust Investment Partners LLP (2 Savoy Court, London WC2R 0EZ), authorised and regulated in the UK by the Financial Conduct Authority (FRN 518552) to undertake regulated investment business.
It should not be construed as advice for investment in any product or security mentioned, an offer to buy or sell units/shares of Funds mentioned, or a solicitation to purchase securities in any company or investment product. Examples of stocks are provided for general information only to demonstrate our investment philosophy. The investment being promoted is for units in a fund, not directly in the underlying assets.
This information and analysis is believed to be accurate at the time of publication, but is subject to change without notice. Whilst care has been taken in compiling the content, no representation or warranty is given, whether express or implied, by Liontrust as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified.
This is a marketing communication. Before making an investment, you should read the relevant Prospectus and the Key Investor Information Document (KIID) and/or PRIIP/KID, which provide full product details including investment charges and risks. These documents can be obtained, free of charge, from www.liontrust.com or direct from Liontrust. If you are not a professional investor please consult a regulated financial adviser regarding the suitability of such an investment for you and your personal circumstances.
