Interim Management Statement

RNS Number : 7846L

F&C Global Smaller Companies PLC

15 August 2013

 



Date:        15 August 2013

Contact:    Peter Ewins                                                          

                 F&C Management Limited                                      

                 020 7628 8000                                                      

F&C Global Smaller Companies PLC

Interim Management Statement

for the quarter ended 31 July 2013

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 July 2013	30 April 2013	% Change
Share price	816.00p	764.50p	+6.7
Net asset value per share (debenture at nominal value)	805.69p	756.21p	+6.5
Net asset value per share (debenture at market value)	802.78p	752.47p	+6.7

Manager's review

Equities performed strongly in the first three months of the Company's new financial year. Sentiment has been lifted by signs that the economic recovery is gaining further traction in a number of places, with data in the UK in particular being more encouraging of late, and some better surveys implying that Europe might also be at the least stabilising. There was, however, a broadly based pullback in June as the US authorities indicated that the period of quantitative easing might soon be coming to an end. This development particularly unsettled emerging market investors, although share prices elsewhere bounced back strongly during July.

The Company's benchmark, which is a blended index of the returns of 30% Numis UK Smaller Companies (excluding investment companies) Index and 70% MSCI All Country World ex UK Small Cap Index, recorded a total return in sterling terms of 7.1% in the three months. The Company's net asset value ("NAV") per share total return of 7.1% therefore matched the benchmark, and the share price rose by 6.7% not taking account of the 4.5p final dividend for the 2012/13 year.

Taking the debenture at market value and including current period income, the Company's share price ended July 2013 at a 1.6% premium to NAV which was in line with the end April 2013 level. The Company issued 1,270,000 new shares (2.8% of share capital) during the period to satisfy demand in the market.

Returns from the regional investment portfolios were mixed in the three month period. The best returns came from the developed markets, with more than a double digit sterling total return from both the US and European portfolios, and nearly as much from the UK portfolio. After a strong end to the last financial year, Japanese smaller companies lost some ground in the quarter, while there was significant weakness in some Latin American and Asian markets as it became more apparent that growth has slowed in some of the more important local economies.

Pleasingly stock selection remained generally satisfactory, with our investments in funds targeting Japan well ahead of the local smaller companies index, and we were also slightly ahead in Europe and the UK. Our caution towards emerging markets, as reflected in an underweight stance compared to the benchmark in the Rest of World segment, helped relative performance in the quarter. We did, however, underperform at the stock level in the US over the three months and the decision to be slightly underweight in this market held back the overall relative performance.

Over the period, we added to our UK weighting on the basis that we had identified a number of new stock ideas and, given the more upbeat nature of the domestic macroeconomic data, we felt that sterling could regain some ground against the other major currencies. The exposure to Japan and the Rest of World fell, largely on the back of the weak relative performance of the local markets. We have remained cautious as regards our emerging markets exposure, though the recent weakness may present some more attractive opportunities in the coming period. The Company ended the period with net cash of 2.8%, compared to net cash of 2.3% at 30 April 2013, reflecting a degree of caution about the near term valuation of markets.

It is pleasing to be able to report that during the period, the Company won both the "Money Observer" and "What Investment" Best Global Investment Trust awards for 2013, reflecting positively on performance over recent years. We have now won the former title for three consecutive years.

Geographical distribution of the investment portfolio at 31 July 2013

	31 July 2013 % of total investments	30 April 2013 % of total investments
North America	41.1	40.4
United Kingdom	29.4	27.5
Continental Europe	12.1	12.0
Rest of World	10.2	11.7
Japan	7.2	8.4

The portfolio obtains exposure to Japanese, Asian and Latin American markets via a number of collective funds as opposed to individual holdings. F&C is responsible for selecting the appropriate funds to use for these markets.

Ten largest holdings at 31 July 2013

31 July 2013	30 April 2013	Company Country	% of total investments
1	1	M&G Japan Smaller Companies Fund Japan	2.9
2	2	iShares MSCI Japanese Small Cap Exchange Traded Fund Japan	2.6
3	3	Aberdeen Global-Asian Smaller Companies Fund Rest of World	2.4
4	4	Utilico Emerging Markets Rest of World	2.1
5	5	The Scottish Oriental Smaller Companies Trust Rest of World	1.8
6	-	Aberdeen Global-Japanese Smaller Companies Fund Japan	1.3
7	7	Allianz GIS RCM Little Dragons Fund Rest of World	1.3
8	8	Alere United States	1.2
9	10	Rex Energy United States	1.1
10	28	Conn's United States	1.1

Ten largest equity holdings (excluding collective funds) at 31 July 2013

31 July 2013	Company Country	% of total investments
1	Alere United States	1.2
2	Rex Energy United States	1.1
3	Conn's United States	1.1
4	CLS Holdings United Kingdom	1.0
5	Allscipts Healthcare Solutions United States	1.0
6	ViaSat United States	1.0
7	The Andersons United States	1.0
8	Universal Truckload Services United States	1.0
9	Atlantic Tele-Network United States	0.9
10	Orbital Sciences United States	0.9

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 July 2013 and the date of publication of this statement which would have a material impact on the financial position of the Company. The Company has issued a further 320,000 shares since the end of the period and the number of shares in issue at 14 August 2013 was 46,563,102.

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

15 August 2013

 

END

 

 

IMSGMGMRGKLGFZM