16th Oct 2025 12:53
(Alliance News) - Strategic Equity Capital PLC on Thursday raised its dividend and noted "tentative signs" of improving market confidence as performance was hurt by exposure to London's junior market.
The specialist alternative equity trust that maintains a portfolio of UK smaller companies reported a 0.1% decline in net asset value per share on a total return basis, for the financial year that ended June 30, while its comparator index the FTSE Small Cap (ex Investment Trusts) Total Return Index rose 13.1% over the same period.
However, the trust beat the AIM All-Share Index which fell 2.4%.
Strategic Equity Capital said this relative underperformance reflects its "significant exposure" to AIM shares over the year.
"Although near-term performance was disappointing, the longer-term record remains strong, with NAV total returns of 27.3% and 69.5% over three and five years respectively", commented the trust.
NAV per share fell 1.1% to 392.47 pence from 396.87p, and Strategic Equity Capital declared a final and therefore total dividend for the year of 4.25 pence, up 21% from 3.50p a year prior. Strategic Equity Capital did not declare an interim dividend.
Shares in the trust were 1.3% higher at 380.00 pence around midday on Thursday in London.
Strategic Equity Capital said positive contributors to performance included UK infrastructure engineering provider Costain Group PLC, pensions consulting and administration specialist XPS Pensions Group PLC and independent video game publisher everplay group PLC.
By contrast, key detractors included cloud computing and datacentre provider Iomart Group PLC, digital marketing agency Next 15 Group PLC and wealth manager Brooks Macdonald Group PLC.
Looking ahead, Strategic Equity Capital expects the global macroeconomic and geopolitical environment to "remain a source of volatility", with the UK's "stretched fiscal position and uncertain growth and tax outlook" anticipated to weigh on sentiment.
Despite this, Strategic Equity Capital said it sees "tentative signs" of improving market confidence, such as increasing global equity flows into UK equities.
Last month, the trust offered a realisation opportunity to shareholders via a tender offer. On Wednesday this week, it said 9.5 million shares were validly tendered, representing 22% of its issued share capital.
"The first half of the financial year was particularly challenging, with market sentiment adversely affected by the UK’s Autumn budget, which introduced changes to national insurance, minimum wage levels, and, most notably for our portfolio, a reduction in inheritance tax relief for AIM-quoted stocks. This, combined with broader geopolitical uncertainty, contributed to a general de-rating across UK smaller companies, in particular those listed on the AIM market," said Chair William Barlow.
"However, the second half of the year saw a significant recovery, in part reflecting market strength as inflation fell towards target levels and interest rate expectations moderated. It is perhaps notable that of the portfolio’s six largest detractors in the first half of the year, four of these investments were then the portfolio’s greatest contributors across the second half," continued Barlow.
By Christopher Ward, Alliance News reporter
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Related Shares:
Strategic EqtyCostainXps PensionsEverplay GroupIomartNext 15 GroupBrooks Macdonald