22nd Jun 2020 11:52
(Alliance News) - BMO Global Smaller Cos PLC on Monday reported a sharp drop in annual assets but still was able to outperform its benchmark.
At April 30, the trust's NAV per share stood at 120.26 pence each, down 15% compared to 141.67p at the same point a year before.
BMO Global's net assets dropped 15% to GBP726.5 million from GBP854.6 million.
The trust declared an annual dividend of 1.70 pence, up 3.0% on a year before.
The trust recorded a NAV total return for the period of negative 13.8%, but was able to slightly outperform its benchmark, which lost 14.1% in the same period.
BMO Global's benchmark is a blended index of the returns from the MSCI All Country World ex UK Small Cap Index and the Numis UK Smaller Companies (excluding investment companies) Index in a 70%-30% proportion.
Chair Anthony Townsend commented: "Investment in equities should always be made taking a long-term perspective and while the fall in NAV this year was disappointing, shareholders should remember that it came after seven years of consecutive positive returns."
He continued: "In terms of sector performance, it was once again a good year for technology and health care stocks. Collapsing demand for oil as transportation market demand slumped, meant the opposite was the case for energy stocks, and industrial companies also tended to struggle. The market shake-out in February and March was particularly felt by companies with cyclical earnings and high borrowings. Investors moved into safer, more defensive stocks and those less impacted by the virus."
Looking ahead, Townsend said giving an outlook in the current circumstances is "very tough" but he noted there will be opportunities to take advantage of "valuation anomalies".
"A large number of companies held in the portfolio have withdrawn earnings guidance for 2020, rendering near-term valuation metrics redundant," the chair added.
"The harsh reality is that profits will be sharply down for many companies this year. Against this, the dramatic scale of central bank and government intervention is providing a great support to financial markets and seems set to stay. With the lockdowns being eased back, share prices have enjoyed a bounce at the start of the new financial year."
Shares in BMO Global Smaller Cos were 0.7% higher in London on Monday at 117.16 pence each.
By Paul McGowan; [email protected]
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