20th Jun 2016 07:55
LONDON (Alliance News) - Dunedin Smaller Companies Investment Trust PLC, which targets long-term growth by investing in smaller companies in the UK, on Monday said it underperformed its benchmark in its first half, and noted that stockmarkets were likely to remain volatile.
For the six months ended April 30, Dunedin Smaller Companies said its net asset value total return was 0.7%, compared to a 1.3% total return for its FTSE SmallCap Index benchmark.
Dunedin Smaller Companies said its lack of exposure to small company mining stocks hurt its performance in the first half of its financial year, as well as its secondary exposure to oil and gas markets, and volatility across markets.
"Although markets increased over the period as a whole, there was significant volatility, with sentiment dominated by concerns over slowing growth in China and the weakness of commodity prices, in particular oil, which fell to below USD30 per barrel for the first time in 12 years. Towards the end of the period, sentiment improved as the Chinese authorities and European Central Bank announced further measures to stimulate their economies, resulting in an increase in investor appetite for risk," Chairman Norman Yarrow said in a statement.
Dundedin proposed an interim divided of 2.15 pence per share, in line with a year earlier.
"The prospects for global economic growth remain uncertain, with China central to the outcome. In the UK, although the recovery is continuing, it remains fragile and the timing of interest rate increases keeps moving further out. The uncertainty caused by the referendum on EU membership has been unhelpful in the context of both investor and corporate sentiment," the chairman added.
"With so much uncertainty, stockmarkets are likely to remain volatile and, at current levels, equity valuations appear reasonably full, especially when expectations of slower corporate profit growth are taken into account. Smaller companies are, however, more attractively valued at the current time although investors are paying a premium for quality businesses, and this is evident in the valuation of the company's holdings," Yarrow said.
Shares in Dunedin Smaller Companies were up 0.2% on Monday at 191.41 pence.
By Hannah Boland; [email protected]; @Hannaheboland
Copyright 2016 Alliance News Limited. All Rights Reserved.
Related Shares:
Dunedin Smaller Cos. Investment Trust PLC