Hughes, who formerly managed the UK portfolio of the investment trust, assumed control of the fund from its former manager Richard Smith following the change. As well as selling down the portfolio’s overseas holdings, he is also in the process of selling a number of British holdings that are too large for the new mandate.He says: “Following the mandate change on February 10, we were given a four-month window to realign the trust to its new FTSE Fledgling (ex ITs) benchmark. So far, we have sold all the holdings in our international portfolio, except 12 European stocks and nine Japanese. While we have until May to sell these, we want to have a clean balance sheet by April 30.” The trust now focuses on British stocks with a market capitalisation of under £100m at the time of the investment. Hughes says at present 15% of the trust’s £62m UK portfolio is held in companies outside this range, either in the FTSE 250 or equivalent sized Aim-listed stocks. All these holdings will be sold by the end of next month. Hughes says: “Before the change in mandate, the trust consisted of five portfolio strands: UK, Europe, Japan, Asia and North America. At the last year-end, the trust had a total net asset value of £80m and consisted of 80 overseas holdings and 90 British stocks.” The plan is for the new portfolio to hold 60-100 UK micro-cap holdings. The investment process the micro-cap fund will take will not be dissimilar to the small-cap process managed by Henderson’s Neil Hermon. However, Hughes says more emphasis will be placed on the management teams of the individual businesses.