13th Jun 2016 09:49
LONDON (Alliance News) - Montanaro UK Smaller Companies Investment Trust PLC on Monday said it is important that investors in smaller companies do not forget to make long-term investment decisions, even with the distraction of political issues such as the UK's referendum next week on whether to remain a member of the EU or leave.
"It is important that politics do not divert SmallCap investors' attention away from making long-term investment decisions. It is interesting to note that over the past 60 years, during which the UK has experienced periods of political upheaval and economic hardship, quoted smaller companies have outperformed larger companies by 3.5% per annum on average," Chairman Kathryn Matthews said in a statement.
The chairman said that UK SmallCap stocks are not as well researched as other areas of the market. That is becoming increasingly the case, she said, as brokers leave the market due to competition and new regulations such as the EU's revised Markets in Financial Instruments Directive, which comes into force in 2018.
"We remain confident that current conditions will continue to offer investment opportunities for those in a position to complete the in-house research and due diligence required. With one of the largest specialist SmallCap teams in Europe, we believe that the manager is well placed to seize the attractive opportunities that often emerge during periods of political uncertainty," Matthews said.
Managed by Montanaro Asset Management, the investment trust, which is tasked with generating capital growth by investing in smaller companies listed on the London Stock Exchange or AIM, said its net asset value, excluding current period revenue, rose by 0.7% to 558.4 pence. Its share price fell by 0.4% to 461.0, with the discount at which the shares traded to net asset value widening.
The increase in net asset value was inferior to the 1.4% rise in the Numis Smaller Companies Index (excluding investment companies).
"In spite of all the recent economic and political uncertainty, we continue to believe that our investment trust offers a very attractive investment opportunity. The closed-ended structure is ideal for shareholders to invest in quoted UK 'smaller' companies which are less well-researched and more illiquid than larger, blue chip companies, without having to be concerned about the impact of cash flows that affect open-ended funds," Matthews said.
Shares in Montanaro UK Smaller Companies Investment Trust were down 0.3% at 460.44p Monday.
By Samuel Agini; [email protected]; @samuelagini
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