Fund manager commentary
Smaller company markets around the world delivered varied returns in June, with gains in sterling terms coming through in Japan, the US and many emerging markets, while UK and European markets weakened. To a degree this reflected a reversal of the performance over recent times and in the UK in particular, some kind of pull-back was probably overdue. Here, the Bank of England Governor’s comments around the potential for an early increase in interest rates were unhelpful for sentiment. The Company’s NAV was nevertheless up for the month and slightly ahead of the Benchmark.
In the UK, our portfolio beat the local small cap index, with good returns from recent purchases Clipper Logistics (online logistics operator) and niche engineer Pressure Technologies. In real estate, Max Property was strong as the company announced strong results and letting news. We were also a little ahead in Europe with the star performer being in financials with structured products company Leonteq reporting strong results, while on the industrial side, Kuka announced strong orders. There was some profit taking however in automotive related stock Plastics Omnium.
In the US, our portfolio was just behind the Russell 2000 index in the month. Rex Energy’s production growth has been delayed a little, and shares in car parts supplier LKQ suffered from a decline in scrap metal prices. More positively shares in Pernix Therapeutics continued to respond well to recent deal news, and FTI Consulting announced better than expected earnings guidance.
Our Japanese small cap funds once again performed well and were ahead of the small cap index which itself was strong as sentiment surrounding the market and economic outlook improved. Of our Asian facing funds, Scottish Oriental Smaller Companies performed well and its discount came in, helping returns further.
The Company announced its 2013/14 results in June, and plans for an issue of up to £40m Convertible Unsecured Loan Stock. Details of this can be found on the website and shareholders should have received details in the post in relation to the shareholder votes and how to apply for Convertible Unsecured Loan Stock. We look forward to seeing shareholders at the AGM and General Meetings to be held on 24th July.
As at 30 June 2014