With UK smaller companies coming back into favour after a long period on the sidelines, it is time this column looked at a fund with a strong and long track record in this corner of the stock market.

North Atlantic Smaller Companies is a £555m investment trust run by chief executive and fund manager Christopher Mills since 1982. As its name suggests, it takes an Anglo-American approach to investing in “small cap” stocks with nearly 10pc of assets in US businesses, although more than three quarters is held in UK companies.

Mr Mills, 71, who is also founder and chief executive of investment group Harwood Capital, is best known as an activist investor, although he prefers to use the word “engaged” to describe his approach of buying big stakes in companies and joining their boards to help managements turn around or restructure businesses.

Whatever one calls it, Mr Mills’ robust defence of shareholder returns has proved successful. Shareholders in Hipgnosis Songs, where he had no stake, should be delighted he was recruited to the music royalty fund’s board last year as he was instrumental in securing its sale to US investment giant Blackstone and salvaging a decent return for investors after several years of poor performance.

The results of his deal-making are best shown in the way North Atlantic Smaller Companies has consistently beaten the returns of the UK stock market. According to the company, at 30 June his 42-year tenure had seen Mills generate a 13pc annualised return from the trust’s investments, exceeding the 8.9pc annual return from the FTSE All-Share index.

Its underlying investment growth has also outperformed the UK benchmark over five, 10, 20 and 30 years, although annual returns have fallen to an average of 6.7pc since 2019.

Despite the shares trading 29pc below the net asset value of the trust’s investments, shareholders have done well with a ten-year total return including annual dividends of 147.5pc. That easily beats the 61.2pc return from the Deutsche Numis Smaller Companies index.

As with its UK small-cap rivals, the past three years have been difficult ones, with the shares down 8pc as investors spurned domestic stocks worried about the impact of high interest rates and inflation.

The past 12 months have witnessed a recovery, however, with the shares rallying 19pc, helped by the strong performance of Oryx International Growth, a £202m investment trust that Mr Mills also runs with his son Nicholas, in which 17.7pc of North Atlantic’s assets are invested. (North Atlantic also holds 3.7pc in Odyssean, another UK small-cap investment trust in the Harwood stable which we tipped in June 2022.)