| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 9.68% | 11.29% | 3.47% |
The Janus Henderson UK Smaller Companies Fund returned 11.29% in Q2 2026, outperforming its benchmark which returned 9.34%. Key contributors included Computacenter, which benefited from strong hyperscaler demand related to AI infrastructure and FTSE 100 inclusion; Renishaw, driven by semiconductor and defense sector demand; and Luceco, which saw strong growth in EV charging markets. Detractors included Serco, affected by US defense contract delays and UK political uncertainty; Serica, impacted by falling oil prices; and Rathbones, which issued a profit warning. The managers initiated positions in cybersecurity firm NCC and consultancy Elixir International while exiting JTC and Bytes Group. Despite near-term headwinds from geopolitical tensions, sticky inflation, and UK political instability following Prime Minister Starmer's resignation, the managers believe UK small-cap valuations remain attractive below long-term averages. They see potential catalysts in political stability, deregulation, and persistent M&A activity. The portfolio is positioned to withstand challenging conditions while participating in any upswing through disciplined selection of cash-generative growth businesses.
The fund invests in cash-generative UK smaller companies with experienced management teams, trading at attractive valuations below long-term averages after a lost decade of underperformance, positioned to withstand challenging economic conditions while participating in any recovery driven by potential catalysts including UK political stability, deregulation, and persistent M&A interest.
The managers express cautious optimism despite elevated uncertainty. They believe the portfolio is positioned to withstand challenging economic conditions while participating in any upswing. They see potential catalysts in UK political and fiscal stability, attractive small-cap valuations below long-term averages, and stabilizing earnings forecasts. However, they acknowledge near-term risks from geopolitical tensions, sticky inflation, energy price shocks, and UK political uncertainty following the Prime Minister's resignation. The tone is balanced, acknowledging both headwinds and potential opportunities, with emphasis on the fund's resilient positioning and long-term value creation through disciplined stock selection.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 13 2026 | 2026 Q2 | CCC.L, LUCE.L, MAB.L, NCC.L, RAT.L, RSW.L, SQZ.L, SRP.L | cybersecurity, defense, EV Charging, semiconductors, small caps, technology, UK Equities, value | - | The fund delivered 11.29% in Q2 2026, outperforming on strength in AI-related infrastructure, semiconductors, and EV charging. After a lost decade, UK small caps trade below long-term averages with stabilizing earnings. The managers see catalysts in political stability, deregulation, and M&A interest. Portfolio positioning emphasizes cash-generative growth businesses capable of withstanding uncertainty while capturing recovery upside. |
| Apr 15 2026 | 2026 Q1 | BBY.L, BUR.L, BWY.L, GNC.L, OXIG.L, SQZ.L | energy, Geopolitical, inflation, infrastructure, small caps, United Kingdom, value | - | UK small-caps declined 7% in Q1 amid geopolitical tensions and energy price volatility. Energy and infrastructure holdings outperformed while real estate lagged. After a lost decade, managers see compelling value with attractive valuations, improving earnings momentum, and robust corporate balance sheets positioning the portfolio for recovery when conditions improve. |
| Jan 16 2026 | 2025 Q4 | BBY.L, BWY.L, CHG.L, CVSG.L, DOM.L, MTO.L, OSB.L, QQ.L | Construction, defense, Government Policy, small caps, Uk, Valuations | - | UK small-cap fund underperformed in Q4 as defence stocks fell on peace speculation while construction names rallied on budget relief. Managers see attractive valuations despite macro uncertainty, adding facilities management and veterinary services exposure while trimming outperformers. Portfolio positioned defensively for current challenges but ready to participate in recovery. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIThe manager is re-examining portfolio companies through the AI lens, assessing whether AI could automate processes, weaken pricing power, or reshape revenue models. Markets have been quick to punish perceived AI losers and overzealous in rewarding perceived winners. Computacenter benefited from strong hyperscaler demand related to AI infrastructure. |
Artificial Intelligence Automation Hyperscalers Infrastructure |
CybersecurityThe fund initiated a new position in NCC, a cyber security business, following the sale of its non-core division. The core cyber business has been improving with returning organic growth, expanding margins and restructuring benefits, while shares remained attractively valued given operational momentum and balance sheet strength. |
Cyber Security Organic Growth Margins | |
EV ChargingLuceco's share price rose following multiple positive profit forecasts, driven by strong growth in the EV charging market and associated high-margin demand response revenues. This was a key contributor to fund performance during the quarter. |
Electric Vehicles Charging Infrastructure Demand Response | |
SemiconductorsRenishaw's shares rose due to profit upgrades following strong demand from customers in the semiconductor sector. The company also benefited from defense sector demand. This was a key contributor to fund performance. |
Semiconductor Demand Engineering Technology | |
DefenseRenishaw benefited from strong demand from customers in the defense sector alongside semiconductor demand. Serco faced headwinds from delays in US Department of Defense contract awards, which contributed to share price underperformance. |
Defense Contracts Government Services | |
OilOil prices slumped during the quarter, with Brent crude falling over 38% as optimism around a resolution to the Middle East conflict increased. Serica's share price fell due to declining oil and gas prices. The manager notes ongoing damage to Middle Eastern energy infrastructure and closure of the Strait of Hormuz have increased energy price risks. |
Oil Prices Energy Geopolitics | |
Small CapsAfter a lost decade in UK smaller companies, the manager sees good reasons why fortunes could change. UK small-cap valuations sit below long-term averages while earnings forecasts are stabilizing. Valuations remain low versus other developed markets even when adjusting for sectors. History has shown small-cap stocks can perform well after periods of economic dislocation. |
Valuations UK Equities Market Dislocation | |
United KingdomThe UK government faces challenges reviving economic growth while walking a fiscal tightrope. Political instability following Prime Minister Starmer's resignation creates near-term fiscal uncertainty and risk to business confidence. However, positive developments include resetting trading relationships with Europe, deregulation of financial services, and planning reform. Political and fiscal stability could prove an important catalyst. |
UK Politics Fiscal Policy Economic Growth Regulation | |
| 2026 Q1 |
EnergyMiddle East conflict and closure of Strait of Hormuz caused energy price surge, benefiting North Sea oil and gas producers like Serica Energy. Rising oil prices threaten to fuel inflation and complicate monetary policy decisions. |
Oil Natural Gas Energy Trading Geopolitical |
InfrastructureStrong demand for UK infrastructure projects and higher growth in US orders supported construction companies like Balfour Beatty. Government planning reform and infrastructure investment remain key policy priorities. |
Construction Infrastructure Spending Government Policy | |
GeopoliticalOngoing conflicts in Middle East and Ukraine, plus heightened US-China tensions create significant uncertainty. Trump administration policies on tariffs, immigration and regulation add volatility to global markets. |
Trade Policy Sanctions Defense Policy Uncertainty | |
InflationSticky inflation above target in US and UK, exacerbated by oil supply shock from Gulf conflict. Central banks face challenging task of containing second-round inflation effects amid softening labor markets. |
Rates Monetary Policy Energy Prices | |
| 2025 Q4 |
Defense SpendingDefence companies Qinetic and Chemring were key detractors as share prices fell amid news of potential peace agreement between Russia and Ukraine. UK defence contractors are also waiting for publication of the government's Defence Investment Plan, which is slowing decision making. |
Defense Contractors Government Spending Geopolitics |
HomebuildersHousebuilder Bellway was a key positive contributor, with its share price rallying alongside UK domestic companies following the benign outcome of the UK budget. Bellway also reported encouraging preliminary full-year results. |
Housing Construction Domestic Budget Results | |
Infrastructure SpendingConstruction company Balfour Beatty's share price continued to rally following confirmation of strong order-book momentum and cash generation. The government faces challenges reviving economic growth with building blocks including planning reform in place. |
Construction Infrastructure Government Growth Reform | |
Small CapsAfter a lost decade in UK smaller companies, managers see good reasons why fortunes could change. UK small-cap valuations remain attractive and sit well below long-term averages, while earnings forecasts are beginning to stabilise. History demonstrates that small-cap stocks have performed best after periods of economic dislocation. |
Valuations Earnings Performance Dislocation Recovery | |
BuybacksCompanies' balance sheets are more robust and in recognition of deep undervaluation of their own equity, an increasing number of companies are buying back stock. This signals confidence in the UK equity market is slowly rebuilding. |
Share Repurchases Undervaluation Balance Confidence |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| No Elevator Pitches found | ||||||||||
| TICKER | COMMENTARY |
|---|---|
| CCC.L | Computacenter's share price rose following profit upgrades driven by continued strong order book momentum in UK and North American hyperscaler demand, alongside bolt-on acquisitions. The shares rallied alongside other AI-related companies and also saw upward technical pressure driven by its inclusion in the FTSE 100 Index. |
| RSW.L | Shares in Renishaw rose due to profit upgrades following strong demand from customers in the semiconductor and defence sectors. |
| LUCE.L | Luceco's share price rose following multiple positive profit forecasts, driven by strong growth in the EV charging market and associated high-margin demand response revenues. |
| SRP.L | Despite confirming that trading is in line with expectations, Serco's shares de-rated due to delays in US Department of Defense contract awards and concerns that a change in UK government could lead to delayed contract awards and potentially changing policy priorities. |
| SQZ.L | Serica's share price fell due to declining oil and gas prices amid optimism around a resolution to the conflict in the Middle East. |
| RAT.L | Shares in Rathbones fell following an unexpected profit warning caused by remedial action, which was required after an FCA skilled-persons review. |
| NCC.L | We also initiated a new position in NCC, a cyber security business, underpinned by a near-term capital return following the sale of its non-core Escode division, with the proceeds expected to be primarily returned via a premium tender offer. The core cyber business has been improving, with returning organic growth, expanding margins and restructuring benefits, while the shares remained attractively valued in our view given the operational momentum and balance sheet strength. |
| MAB.L | We also sold out of textile rental company Johnson Service Group and used the proceeds to add to the position in pub landlords Mitchells & Butlers. |
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