Interim Management Statement

RNS Number : 4899H

F&C Global Smaller Companies PLC

22 February 2010

 



Date:        22 February 2010

Contact:    Peter Ewins                                                          

                 F&C Management Limited                                      

                 020 7628 8000                                                      

F&C Global Smaller Companies PLC

Interim Management Statement

for the quarter ended 31 January 2010

Objective

F&C Global Smaller Companies PLC invests in smaller companies worldwide in order to secure a high total return.

Summary of results

Capital return

Attributable to equity shareholders	31 January 2010	31 October 2009	% Change
Share price	401.00p	392.25p	+2.2
Net asset value per share (debenture at nominal value)	443.96p	424.67p	+4.5
Net asset value per share (debenture at market value)	436.08p	416.83p	+4.6

Manager's review

Equity markets rose in the three months to the end of January 2010. Confidence in the outlook was lifted by improving economic data with most major economies now out of recession. Corporate earnings news tended to surprise on the upside, with many companies benefiting from cost-cutting and the fiscal stimulus packages introduced during 2009.

Smaller company shares continued to perform satisfactorily compared to the wider market indices. International markets did better on the whole than the UK market. Measured in sterling terms, returns were best in the US market, which had underperformed during the first half of the Company's financial year. Growth data from the US has been encouraging, although the employment market remains weak. Asian markets, on the other hand, performed well early in the period, but gave up some ground in January as investors became more risk-averse.

The net asset value ("NAV") per share total return including the debenture at nominal value for the three months was 4.9%, against the total return of 6.1% for the Company's Benchmark Index (40% Hoare Govett UK Smaller Companies Index and 60% MSCI World ex UK Small Cap Index), while the share price rose 2.2%. For the nine months ended 31 January 2010, the NAV total return was 24.8% against 26.0% for the Benchmark, with the share price up by 23.4%.

Over the three months, the portfolio return was behind the Benchmark due to negative stock selection.  However, the Company did benefit from being underweight in the UK and overweight in Asia. Ahead of an election, and given the likelihood of a muted economic recovery in the UK, the Manager does not believe that the UK market is likely to be in favour compared to other markets. During the period, the Company trimmed the Asian weighting as a result of strong performance and a re-rating of smaller companies in the region to historically extended levels. In contrast the Manager has become a little more positive on Japan in the short term due to it having lagged other markets materially over the last year. The US weighting has been increased given a somewhat more promising outlook compared to Europe, where fiscal deficits are likely to continue to weigh on sentiment, and the potential for growth.

In general, notwithstanding the improved corporate results coming through, the Manager is somewhat more cautious about the near-term potential for equity markets. This is reflected in the fact that on an effective basis there was a net cash position of 0.5% at 31 January 2010 versus a 1.8% geared position at 31 October 2009.

The discount, incorporating the NAV measured on an ex income basis with the debenture at market value, was 7.8% at 31 January 2010. A total of 1,019,928 (2.4% of the outstanding share capital at the beginning of the period) of the Company's shares was bought back for cancellation over the quarter at a cost of £3.7m.

Ten largest equity holdings at 31 January 2010

31 January 2010	Company Country	% of total investments
1	iShares MSCI Japanese Small Cap Exchange Traded Fund Japan	3.6
2	Axa Rosenberg Japan Small Cap Alpha Fund Japan	2.5
3	Aberdeen Global-Asian Smaller Companies Fund Asia Pacific ex Japan	2.1
4	The Scottish Oriental Smaller Companies Trust Asia Pacific ex Japan	1.9
5	Allianz GIS RCM Little Dragons Fund Asia Pacific ex Japan	1.7
6	Australian New Horizons Fund Australia	1.3
7	City of London Investment Group United Kingdom	1.2
8	Utilico Emerging Markets Asia Pacific ex Japan	1.2
9	AXA Framlington Japan Smaller Companies Fund Japan	1.1
10	CLS Holdings           United Kingdom	1.0

The portfolio obtains exposure to Japanese and Asian markets via a number of collective funds as opposed to individual holdings. These funds are mainly managed by third party fund managers based in the Far East with significant local market expertise. F&C is responsible for selecting the appropriate funds to use for these markets.

Ten largest equity holdings (excluding collective funds) at 31 January 2010

31 January 2010	Company Country	% of total investments
1	City of London Investment Group United Kingdom	1.2
2	CLS Holdings           United Kingdom	1.0
3	SDL United Kingdom	0.9
4	Hill & Smith Holdings United Kingdom	0.9
5	CRA International United States	0.8
6	Craneware United Kingdom	0.8
7	Premiere Global Services United States	0.8
8	The Andersons United States	0.8
9	AMERIGROUP United States	0.8
10	Alleghany           United States	0.8

Geographical distribution of the investment portfolio at 31 January 2010

	31 January 2010 % of total investments	31 October 2009 % of total investments
North America	39.5	36.8
United Kingdom	35.3	37.9
Continental Europe	9.8	9.5
Japan	7.1	6.9
Rest of World	8.3	8.9

Further information

Further information, including monthly factsheets and NAVs published since the end of the quarter, can be found on the www.fandcglobalsmallers.com website.

The Board is not aware of any significant events or transactions that have occurred between 31 January 2010 and the date of publication of this statement which would have a material impact on the financial position of the Company.    

This interim management statement has been prepared solely to provide information to meet the requirements of the UK Listing Authority's Disclosure and Transparency Rules.

By order of the Board

F&C Management Limited, Secretary

Exchange House, Primrose Street, London EC2A 2NY

22 February 2010

 

END

 

 

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