Interim Management Statement

RNS Number : 5800A

F&C Global Smaller Companies PLC

20 February 2014

 



Date:        20 February 2014

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 2014

Investment 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 2014	31 October 2013	% Change
Share price	841.50p	836.00p	+0.7
Net asset value per share (debenture at nominal value)	829.85p	831.13p	-0.2
Net asset value per share (debenture at market value)	828.38p	829.68p	-0.2

Manager's review

During the period under review equity markets consolidated their gains from earlier in 2013, with investors having to contend at last with the start of the tapering of quantitative easing in the US. This led to a further period of weakness and volatility for emerging market equities and currencies early in 2014.The UK small cap market posted further solid gains over the three months however, as the re-rating of domestic shares continued.

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 1.0% for the three months. The Company's net asset value ("NAV") per share total return of 0.1% was behind the Benchmark, while the share price increased by 0.7%. Over the nine months of the current financial year, the NAV total return was 10.7% and the Benchmark delivered 12.0%. The share price has risen by 10.1% over the same period.

Taking the debenture at market value and including current period income, the Company's share price ended January 2014 at a 1.6% premium to NAV, compared to a premium of 0.8% at the end of October 2013. A total of 1,832,500 new shares (3.8% of share capital) were issued during the period to satisfy demand in the market. Strong demand has meant that the Company has issued nearly all of the shares possible under the authority obtained at the Company's Annual General Meeting in July 2013. The Company is therefore seeking an early renewal of its authority to issue further shares for cash on a non pre-emptive basis and a circular has been published convening a General Meeting on 6 March 2014.

At the stock selection level we were ahead of the local small cap indices in the UK and Japan, but lagged in the US and European portfolios. Our Rest of World portfolio fell in value over the period as Asian and Latin American small cap markets reversed.

We increased our exposure to the US and Japanese markets over the period. While US small caps remain more highly valued than those in most other parts of the world, and we remain underweight compared to the Benchmark, it is possible that the move to end quantitative easing could eventually lead to a stronger US dollar. Japan's economy is being supported by accommodative monetary policy and corporate earnings are responding to the weaker yen. We have trimmed back our UK exposure reflecting the recent outperformance of the market, and over the period we remained underweight to the emerging markets in terms of our Rest of World exposure.

The Company ended the period with net cash of 2.1%, compared to net cash of 2.6% at 31 October 2013, maintaining a cautious near term outlook.

Geographical distribution of the investment portfolio at 31 January 2014

	31 January 2014 % of total investments	31 October 2013 % of total investments
North America	39.6	38.9
United Kingdom	30.0	30.8
Continental Europe	12.4	12.5
Rest of World	9.4	9.8
Japan	8.6	8.0

The portfolio obtains exposure to Japanese, Asian, Latin American and African 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 January 2014

31 January 2014	31 October 2013	Company Country	% of total assets
1	2	M&G Japan Smaller Companies Fund Japan	4.1
2	1	Aberdeen Global-Japanese Smaller Companies Fund Japan	4.1
3	5	The Scottish Oriental Smaller Companies Trust Rest of World	2.0
4	3	Aberdeen Global-Asian Smaller Companies Fund Rest of World	1.9
5	4	Utilico Emerging Markets Rest of World	1.7
6	-	Manulife Global Fund- Asian Small Cap Equity Fund Rest of World	1.5
7	8	Alere United States	1.2
8	9	CLS Holdings United Kingdom	1.0
9	37	Premiere Global Services United States	1.0
10	7	Rex Energy United States	1.0

Ten largest holdings (excluding collective funds) at 31 January 2014

31 January 2014	Company Country	% of total assets
1	Alere United States	1.2
2	CLS Holdings United Kingdom	1.0
3	Premiere Global Services United States	1.0
4	Rex Energy United States	1.0
5	Atlantic Tele-Network United States	1.0
6	Bottomline Technologies United States	1.0
7	Allscripts Healthcare Solutions United States	0.9
8	Universal Truckload Services United States	0.9
9	Monro Muffler Brake 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.

Since the period end a further 710,500 ordinary shares have been issued.

The Board is not aware of any significant events or transactions that have occurred between 31 January 2014 and the date of publication of this statement which would have a material impact on the financial position of the Company.  As previously stated [on page 1] the Company has issued a circular convening a General Meeting to seek shareholder authority to renew its ability to continue to issue new shares for cash on a non pre-emptive basis.   

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

20 February 2014

 

END

 

 

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