Standard Life UK Smaller Companies Trust’s net asset value per ordinary share increased by 24.7 per cent to 138.67 pence during the six months ended 31 December 2009.
The share price rose by 25.9 per cent to 126.50 pence and the interim dividend doubled to one pence per share.
The trust’s best performing stock was diagnostic testing company Immunodiagnostic Systems Holdings, a recent addition to the portfolio which more than doubled following purchase.
The company’s discount to net asset value over the reporting period consistently remained in the range of seven per cent to ten per cent. This compares favourably with the size-weighted average discount for UK smaller companies of 16.5 per cent at 31 December 2009.
Several new additions were made to the portfolio during the period. These included First Quantum Mining, the Zambian copper producer; Axis-Shield, the Dundee-based specialist in doctors’ office test kits for a range of ailments mainly related to chronic diseases; Intermediate Capital Group, a specialist in mezzanine finance; and Immunodiagnostic Systems Holdings.
In terms of sector exposure, there was a significant increase in the trust’s weighting in the financial, real estate and retail sectors, and a marked reduction in the support services sector during the period.
Harry Nimmo, fund manager – Edinburgh Small Companies Trust, Standard Life Investments, says: “Typically, smaller companies perform very strongly following a turning point in the stock market and economic sentiment. The rally normally lasts 18 months and can lead to returns in excess of 80 per cent over that period. The cyclical nature and perceived additional risk means that smaller companies tend to deliver substantially higher returns than the market as a whole. We appear to be in the third phase of this rally.
“Historically, our investment process has proved resilient in more difficult market conditions, which may become apparent later in the year. Our focus on resilient companies with organic growth and visible earnings should therefore prove beneficial by the end of 2010 and we look forward to the future with confidence.”