28th Jun 2019 11:11
(Alliance News) - Schroder UK Mid Cap Fund PLC on Friday said its net asset value slipped in a "challenging" first half but it was able to outperform its benchmark.
At March 31, the fund's NAV per share stood at 597.40 pence compared to 640.80p at September 30, which represents a 6.8% decrease. At the same point last year, the fund's NAV per share stood at 609.93p.
Schroder UK Mid Cap's net assets slipped 6.7% in the same period, ending the half at GBP214.2 million compared to GBP229.7 million six months prior.
At June 26, the fund said its NAV per share had gained 3.6% from March 31, recovering most of the negative return seen in the prior six months.
The fund declared an interim dividend of 0.38p, 15% higher than the 0.33p distributed in the first half last year. Schroder UK Mid Cap said the rise in dividend payment reflects a 33% rise in dividend income from portfolio companies.
The fund's NAV total return in the six months to March 31 was negative 4.6%, outperforming the company's benchmark, which lost 5.9% in the same period.
The fund's manager, Schroder Investment Management, said the outperformance was "largely" due to stock selection.
"The outperformance had a very domestic flavour, with the top three contributors deriving all of their profits from the UK. UK households continued to increase their spend, for example on homewares (Dunelm Group PLC) and pets (Pets at Home Group PLC), both of which were top three contributors," the manager added. "Dunelm, which is benefiting from the actions of a new management team, was the top contributor to performance."
The manager noted Telecom Plus PLC was a top three contributor after being the fund's top contributor in financial 2019.
Chair Eric Sanderson added: "One reassuring sign of how well the holdings in the portfolio are doing at the moment is the growth in the dividends they have been paying. The increase in the company's income has been exaggerated a little by the higher gearing and other one-off factors, but there is still a strong underlying growth that reflects the long-term logic of owning a diversified group of strongly managed companies that are expanding their market share."
Shares in the fund were 0.4% higher Friday in London at 524.00 pence each.
Related Shares:
Schroder UK Mid & Small Cap Fund