According to Charles Cade, head of investment companies research at Numis, its track record makes it the leading UK-focused investment company over each period.
Despite this long-term outperformance it remains tiny, with only a £23m market cap.
McClure’s open-ended Unicorn UK Income fund is starting to experience large inflows, having grown from £40m to over £140m in the past 12 months.
Yet Acorn Income has not only outperformed the open-ended fund in total return terms but is also paying out more to investors.
Performance of trust vs fund and index over 3yrs
Source: FE Analytics
While Unicorn UK Income yields just 3.18 per cent, Acorn Income pays out a healthy 4.3 per cent, according to AIC figures.
Cade explains that this is partly due to the unusual structure of the trust, which puts off many investors.
It issues two forms of shares: ordinary shares, which pay dividends quarterly, and zero-dividend preference shares, which pay no dividend but will make a final payment of 138p in January 2017. The latter currently trade at 116.8p.
Effectively the shares are a form of gearing, Cade explains, although he says this should not put investors off.
"The zeroes are just a form of borrowing on the shares," he said. "It’s a predetermined payment at a predetermined date, assuming there’s enough assets when it is due, which seems likely given the performance of the fund."
"Like any gearing, if markets come off dramatically it increases your exposure, although it enhances the ability of the fund to do well when the markets are going up."
"For higher-rate tax payers the zeroes are more tax efficient due to the lower rate of CGT [compared to the income tax payable on dividends]."
The yield on the ordinary shares is increased by the existence of the zero-dividend preference shares, as the latter are used to buy stock with dividends that are paid out to the owners of the former, giving them a higher income.
Cade says that there are a couple of reasons for Acorn Income attracting relatively little attention.
"It hasn’t been well marketed but another factor is that the new structure hasn’t been around very long," he explained.
Cade says that the fund used to be much larger but lost some investors during previous restructurings.
The ZDPs were issued in December 2011, replacing a £6m bank loan, and the analyst suggests that many investors may have wanted to see how the new structure did over a longer period.
There are other peculiarities to the structure of the trust. Unlike the majority of closed-ended funds, Acorn Income holds fixed interest investments.
The fund is made up of two portfolios, the equity component, which is run by McClure, and the fixed interest component, which is run by Paul Smith, a bond specialist from Premier Asset management.
The equity part of the trust makes up between 70 and 80 per cent of the portfolio at any one time. Turnover is low, at around 20 per cent a year.
A little less than 60 per cent is held in small cap companies and a further 18 per cent in AIM, with 16 per cent in mid caps.
McClure (pictured) concentrates on companies with low debt and overseas earnings, which may explain why the trust has continued to outperform in a difficult market. The trust beat the Numis Small Cap ex IT index in the difficult years of 2008 and 2011. The only year since 2007 in which it did not do better than the index was in 2009, when the market rebounded strongly.
One of the main reasons the trust has managed to produce a higher-than-average income is the existence of the ZDPs. However, Cade suggests that its small cap focus may also be helping it.
He cited figures from Professors Elroy Dimson and Paul Marsh of the London Business School that show high-yielding UK smaller companies stocks outperform lower-yielding large cap stocks, based on data from 1956 to 2012.
In his fixed interest portfolio, Smith also looks for niche investments overlooked by other investors, and has a highly flexible mandate.
There are 40 investments in total, making it highly diversified, while Smith also uses derivatives selectively.
Acorn Income was the top-performing listed investment trust last year, with NAV returns of 60.5 per cent on the ordinary shares.
As a result, the discount has narrowed to 0.5 per cent, and the trust is planning to discuss issuing new shares at an extraordinary general meeting.