Interim Management Statement

RNS Number : 6458K

F&C Global Smaller Companies PLC

23 August 2012

 



Date:        23 August 2012

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 2012

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 2012	30 April 2012	% Change
Share price	577.50p	588.00p	-1.8
Net asset value per share (debenture at nominal value)	583.78p	596.35p	-2.1
Net asset value per share (debenture at market value)	578.44p	590.60p	-2.1

Manager's review

Most equity markets fell modestly in the three months to the end of July. Sentiment was undermined by ongoing concern about the Eurozone sovereign debt crisis. Spain was forced to request aid for its banks and sovereign bond interest rates for a number of the fiscally stretched countries remained at elevated levels. Economic data was generally underwhelming with the US economy appearing to be hitting a softer patch, while China is now growing at a significantly slower pace than in recent years.

Against this background, smaller company shares generally lagged larger stocks in most of the leading markets. 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 - 2.6% in the three months. The Company's net asset value ("NAV") per share total return of -1.4% was therefore ahead of the benchmark, while the share price fell by 1.8%. Taking the debenture at market value and including current period income, the discount ended the period at 0.2%, compared to 0.4% at the end of April 2012. With the share price on occasions trading at a premium to NAV, 721,345 new shares (1.7% of share capital) were issued during the period to satisfy demand in the market.

While recent market conditions have been difficult, it is pleasing to be able to report that the Company was named Global Investment Trust of 2012 by Money Observer magazine, repeating last year's success on this front. Outperformance against the benchmark over the first quarter of the current financial year was due to positive stock selection, with all the regional portfolios beating their relevant local small cap indices. The best performance came from the US portfolio, which managed to post a 1.1% positive total return in sterling terms. US company profits continue to be supported by the relative strength of the local economy compared to Europe. While European small caps performed poorly, our portfolio continued to prove resilient and it was here that our relative outperformance was most marked (portfolio return of -2.8% versus the -6.7% sterling total return from the local small cap index). The funds held to give exposure to Japan, Asia and Latin America also performed well in the period.

On the asset allocation front there were no major shifts, although we continued to be a net investor into the European markets on the basis that the valuations here look attractive notwithstanding the current challenges. We also added to our Japanese fund holdings given the relatively encouraging performance of the local economy. The Company's gearing of 1.1% at the end of July remains modest, and was just below the level at the end of April 2012 (1.7%). A weakening overall macro-economic picture has repercussions for corporate earnings and we have seen more downgrades in the industrial cyclical sectors in particular.

Despite the weaker near term economic prospects, since the end of the period there has been a rally in share prices, albeit this has been on very light trading volumes at a seasonally quiet time of the year. We are continuing to focus the portfolio on quality, well managed businesses with financial strength which should be well placed to grow over the long term.

Geographical distribution of the investment portfolio at 31 July 2012

	31 July 2012 % of total investments	30 April 2012 % of total investments
North America	40.8	39.8
United Kingdom	28.0	29.0
Rest of World	12.0	12.6
Continental Europe	11.0	10.8
Japan	8.2	7.8

The portfolio obtains exposure to Japanese, Asian and Latin American markets through 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 2012

31 July 2012	30 April 2012	Company Country	% of total investments
1	1	iShares MSCI Japanese Small Cap Exchange Traded Fund Japan	3.3
2	2	Aberdeen Global-Asian Smaller Companies Fund Rest of World	2.8
3	3	Utilico Emerging Markets Rest of World	2.6
4	5	M&G Japan Smaller Companies Fund Japan	2.5
5	6	Axa Framlington Japan Smaller Companies Fund Japan	2.4
6	7	The Scottish Oriental Smaller Companies Trust Rest of World	2.3
7	4	Allianz GIS RCM Little Dragons Fund Rest of World	1.4
8	9	Conn's United States	1.4
9	8	Australian New Horizons Fund Australia	1.0
10	11	America's Car-Mart United States	1.0

Ten largest equity holdings (excluding collective funds) at 31 July 2012

31 July 2012	Company Country	% of total investments
1	Conn's United States	1.3
2	America's Car-Mart    United States	1.2
3	SBA Communications United States	1.1
4	Mohawk Industries United States	1.0
5	Rex Energy United States	1.0
6	Pool United States	1.0
7	Alleghany United States	1.0
8	ACI Worldwide United States	1.0
9	Granite Construction United States	1.0
10	Microsemi United States	0.9

Further information

Further information, including monthly factsheets and NAV's 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 2012 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 198,000 shares since the end of the period and the number of shares in issue at 22 August 2012 was 42,300,335.

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

23 August 2012

 

END

 

 

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