Jupiter’s Rights and Issues Investment Trust offers investors a disciplined approach to capturing opportunities in what remains one of the world’s most unloved equity markets – the UK small and mid-cap market.
Under the management of Matt Cable, the trust combines concentrated conviction investing with a long-term perspective designed to capitalise on both market inefficiencies and an emerging revival in UK smaller companies, evidenced by a 4.6% gain for AIM and 2.6% increase for the FTSE Small Cap index in the early stages of 2026.
A focused strategy in volatile times
The Rights and Issues Investment Trust maintains a deliberately concentrated portfolio of just 20 stocks, all selected from the UK smaller companies universe. This focused approach allows the management team to invest deeply in their highest conviction ideas whilst maintaining meaningful exposure to each position.
Cable acknowledges that 2025 presented unique challenges, particularly with political volatility emanating from the United States. Rather than attempting to trade around this short-term noise, the team has maintained its portfolio structure, running slightly higher cash levels to provide optionality when opportunities arise. Portfolio changes are naturally rare.
“We’re not trying to take large thematic bets in any particular direction,” Cable explains. “It’s very much a long-term investment process. We’re not trying to be clever and trade around short-term noise and volatility.”
Understanding the discount to value
The trust currently trades at a 22% discount to its net asset value, with shares priced at 2,050p. This discount reflects the broader challenge facing UK equities rather than any fundamental weakness in the underlying portfolio. The trust’s NAV has grown by more than 100% over the past 10 years.
In addition to the discount to NAV, Rights and Issues provides exposure to UK small and mid-caps, which themselves are heavily undervalued.
UK equity funds have experienced outflows in almost all of the past 48 months, creating a valuation disconnect particularly stark when compared to US markets.
However, this persistent selling pressure may be creating exactly the sort of opportunity that patient investors can exploit.
Quality and growth, not just value
A critical element of the trust’s philosophy is its refusal to fall into value traps. Cable is emphatic that cheapness alone is never a reason to invest.
“We would never buy anything just because it’s cheap,” he said in a recent presentation. “Cheapness and value are not the same thing. We do care about valuation, but we only want to buy things where we think there’s clear business quality and growth prospects.”
This discipline is demonstrated by the trust’s holding in Eleco, a software company focused on the built environment. Despite recent share price volatility driven by market sentiment rather than fundamentals, the company has demonstrated impressive operational momentum.
“Although the headline rating at 25 times PE is optically quite high, it falls very quickly as the company grows,” Cable notes, highlighting how the trust identifies businesses where near-term valuations may appear stretched but future valuations become increasingly attractive as growth materialises.
Eleco also highlights the types of companies found in Rights and Issues: smaller companies with high growth potential that may be flying under the radar of the wider market.
Cyclical positioning
The trust is comfortable maintaining some cyclical exposure in the portfolio, viewing it as a source of potential returns rather than a risk to be avoided.
“We think that you can be paid for taking cyclical risk,” Cable argues. “We certainly don’t try to time the market perfectly. We are broadly aiming to invest when things are more cyclically depressed.”
This willingness to accept cyclicality reflects the team’s long-term perspective and their confidence in the underlying quality of portfolio companies, even when near-term trading conditions remain challenging.
Signs of revival in UK markets
Several developments suggest the tide may be turning for UK equities. Although the UK government has got many things wrong on the economy, it has demonstrated a serious commitment to revitalising capital markets through a series of reforms, including changes to listing rules, simplification of governance requirements, adjustments to sell-side research regulations, and potential reforms to ISA and pension regimes.
Whilst Cable acknowledges that none of these reforms individually represents a silver bullet, collectively they signal that policymakers recognise the problem and are taking action. The return of IPO activity in late 2025 suggests renewed confidence in London as a listing venue.
The trust has also benefited from the surge in takeover activity targeting UK smaller companies. Reynolds and Alpha Group, both portfolio holdings, received bids during 2025, providing shareholders with immediate returns. Companies including Spectrus, Ricardo, Alphawave and Asura have similarly been acquired, demonstrating that private market participants recognise the value that public market investors have been ignoring.
Portfolio construction and holdings
The trust’s top 10 holdings account for 51.8% of net assets, demonstrating significant concentration in the team’s highest-conviction ideas. Hill and Smith, the largest position at 6.8% at the November, is joined by OSB Group (6.2%), IMI (5.7%) and JTC (5.7%) in providing core portfolio exposure.
From a sector perspective, industrials dominate at 41.9% of the portfolio, followed by financials at 16.1%. Consumer discretionary and technology each account for 8.8%, with the remainder spread across basic materials, utilities, energy and telecommunications. Cash represented just 3.8% of the portfolio, indicating the team remains substantially invested despite recent market volatility.
Over the longer term, the trust has delivered respectable returns despite the challenging environment for UK smaller companies. The NAV has returned 108.3% over ten years, broadly in line with the FTSE All-Share benchmark return of 115.9%, though both lag the share price return of 92.8% due to the widening discount. An improvement in sentiment could see this narrow quickly.
Why Consider Rights and Issues Now?
For investors willing to look beyond near-term volatility, the Rights and Issues Investment Trust offers several compelling attributes. The combination of a concentrated, high-conviction portfolio managed by experienced specialists in UK smaller companies, trading at a substantial discount to NAV, may provide an attractive entry point for investors that share the manager’s long-term philosophy.
The trust’s focus on quality and growth rather than value for its own sake should provide some protection against capital loss, whilst the willingness to maintain cyclical exposure positions the portfolio to benefit when economic conditions improve.
Most importantly, if the various initiatives to revitalise UK equity markets gain traction, and if the substantial valuation gap between UK and international equities begins to close, the trust is well positioned to capture the upside.
For investors seeking exposure to the potential renaissance of UK smaller companies through a disciplined, quality-focused approach, Rights and Issues Investment Trust merits serious consideration. The current 23% discount to NAV provides an additional margin of safety.
