12th Jun 2018 12:08
LONDON (Alliance News) - Montanaro UK Smaller Co Investment Trust PLC said on Tuesday it outperformed its benchmark for its recently ended financial year.
The company's net asset value return for the year to the end of March rose by 7.5%, outperforming the NSCI index, which rose by 2.3%.
Net asset value per share was 679.1 pence as at March 31, up from 631.6p on the same date the year before.
The share price as at the end of March was 560.0 pence, reflecting a discount to net asset value of 16%, narrowed from 18% the year before.
Shares in the investment trust were up 0.6% at 587.28 pence on Tuesday.
Montanaro said it had considered changing its benchmark index from NSCI to Numis Smaller Companies Plus AIM (ex investment companies), considering that the former covers 350 companies and the latter 1,274 constituents.
However, the trust decided to keep NSCI as many of the companies under NSCI plus AIM would not meet Montanaro's investment criteria.
The trust said that its strong performance was largely due to the addition of AIM stocks, which at the end of end of March represented 27% of the total portfolio by value, close to the self-imposed limit of 30%. As a result, Montanaro has decided to increase the limit to 40%.
Montanaro UK Smaller Cos will pay a dividend of 11.0 pence per share, up 4.8% from 10.5p the year before.
"Currently, there are more reasons for caution than usual: for example, rising inflation - combined with the limited ability of governments worldwide to continue with quantitative easing indefinitely - could lead to higher interest rates and bond yields, perhaps undermining equity valuations," said Chairman Roger Cuming.
"There are fears over trade wars and concerns over the excessive debt levels of countries, corporates and individuals. In the UK, Brexit uncertainties and slowing GDP growth have led overseas investors to reduce UK weightings in portfolios to low levels. For the long-term investor, this might represent an opportunity as these are rebuilt over time," Cuming added.
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