There’s never a perfect time to invest – Schroder UK Mid Cap Fund is a smart buy

Their rise should boost the Schroder UK Mid Cap Fund’s performance and help to narrow a discount to net asset value that has widened by one percentage point to 11pc since our notional purchase in February.

Typically, falling interest rates encourage savers to invest in risky assets such as shares by making cash less attractive.

Investors are also likely, somewhat counterintuitively, to become less risk averse and more bullish as the stock market rises.

As ever, the trust’s relatively high share price volatility due in part to gearing of 9pc is of little concern to this column.

In fact, debt is welcome given the upbeat long-term prospects for the trust, since it magnifies returns. And with its rise in net asset value outperforming the wider index by 0.7 percentage points per annum over the past decade, the company has a solid track record. 

Its list of major holdings, meanwhile, still contains several stocks that this column has previously tipped.

To raise capital for the additional purchase, our holding in TwentyFour Income will be removed from the portfolio. The fund, which invests in asset-backed securities, has produced a 14pc total return since being added in August 2021.

In the short run, the Schroder UK Mid Cap Fund faces a period of uncertainty that could mean its share price volatility is elevated.

But on a long-term view, its wide discount to net asset value, alongside dirt-cheap valuations within the FTSE 250 index, mean further capital growth is ahead.

Questor says: buy

Ticker: SCP

Share price at close: 620p

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