16th Sep 2014 10:11
LONDON (Alliance News) - Invesco Perpetual UK Smaller Companies Investment Trust PLC Tuesday said it outperformed its benchmark in the first six months of the year, though its total return was negative, in what its chairman called a "challenging period" for UK smaller companies.
In a statement, the trust, which invests predominantly in the shares of small to medium sized UK quoted companies, said it delivered a total return of negative 1.6% in the six months ended July 31. The Numis Smaller Companies Index (ex Investment Companies) returned negative 2.9%.
The trust's share price decreased by 2.1% during the period, down to 310.0 pence as at the end of July from 316.8p at the end of January. During this period the discount of the share price to NAV narrowed marginally to 13.0% from 13.9%.
Its net asset value, after charging proposed dividends, fell to 354.6p from 363.0p over the period.
"Recent economic data has been indicative of a recovery in the UK. Although this domestic improvement is positive news for UK smaller companies, it is somewhat offset by the lacklustre recovery within the Eurozone which appears fragile. The spectre of deflation, coupled with concern over the potential impact on growth of the ongoing geo-political issues in Russia and Ukraine add to the Eurozone's woes," Chairman Ian Barby said in a statement.
"In the UK, the strength of sterling has acted to erode some of the gains made by companies trading with the primary export markets of the Eurozone and US, although more recently the pound has weakened amid uncertainty around the outcome of the Scottish referendum," Barby said.
Barby also said that an increase in interest rates also may create more challenging conditions for growth.
"However, against this backdrop your portfolio manager believes that there is still much to be positive about, not least the exposure of UK smaller companies to the more benign domestic environment, a strengthening labour market and increasing consumer spending," Barby said.
The trust aims to achieve long-term capital growth, calling the pursuit of income of "secondary" importance.
The trust's shares were Tuesday quoted up 1.3% at 316.75p.
By Samuel Agini; [email protected]; @samuelagini
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