25th Oct 2016 11:25
LONDON (Alliance News) - BlackRock Smaller Companies Trust PLC said Tuesday it underperformed against its benchmark index over the first half of the year, but is well positioned against volatility caused by the UK's vote to leave the European Union.
BlackRock Smaller Companies reported that over the six months to August 31, its net asset value per share rose by 8.8% to 1,079.28 pence from 992.18p. This compares to its benchmark Numis Smaller Companies plus AIM Index increasing by 9.5% in the same period.
The trust declared an interim dividend of 8.00p per share for a dividend yield of 2.1%, up from 7.00p and 2.0% the year prior.
The share price of the BlackRock Smaller Companies finished the period at 895.50p, having risen 3.8% from 863.00p, leaving it at a 16% discount to its NAV per share.
Shares in BlackRock Smaller Companies Trust were up 0.7% at 902.00p Tuesday.
The trust's investment manager said the underperformance relative to the benchmark was driven by not owning certain large benchmark stocks such as private healthcare group Mediclinic International, which merged with Al Noor Hospitals in February and became a FTSE 100 constituent. An underweight position in the buoyant mining sector also hit the trust's performance.
The trust's investment manager added that the portfolio is overweight in consumer discretionary stocks, particularly in market leading companies that would fare better in a UK downturn. The portfolio is also "significantly overweight" in healthcare stocks, particularly companies with a strong international presence.
"Following the initial reaction to the decision of the UK to leave the EU, markets now face a period of uncertainty around the political and economic policy landscape over the next couple of years as exit negotiations begin," said Chairman Nicholas Fry.
Despite this, we believe that the company's portfolio is soundly positioned with a heavy emphasis on holdings in well managed companies with strong balance sheets, and with a significant proportion of portfolio holdings benefiting from global exposure; your investment manager estimates that approximately half of the profits of our portfolio companies currently arise outside the UK," he added.
By Adam Clark; [email protected]
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