F&C Global Smaller Companies reports full year results

F&C Global Smaller Companies, a listed fund, has announced its full year results for the period to 30 April 2013, showing that NAV total returns beat the benchmark for the fourth year in the last five.

The report also shows that the  dividend increased 15.5% – the 43rd year in a row that it has reported an increase – and that it issued new shares at a premium to prevailing net asset value in response to market demand.

Equity markets performed better in the second half of the year, with the company’s net asset value total return at the halfway stage (5.2%) turning into 28.1% for the year as a whole. The share price again reached a new year-end high of 764.5p, a rise of 30% as the shares moved to a premium over the investment company’s net asset value.

Once again, smaller company shares performed well compared to larger stocks in the UK, and they were slightly ahead in the US, whilst elsewhere in the world relative performance was more mixed, F&C said.

Large exporters in Japan benefited more than small companies from a significant weakening in the yen and in some European markets, where economic conditions remained the most difficult, there was also more interest in the bigger companies.

The company’s benchmark, a blended index of the returns from the MSCI All Country World ex UK Small Cap Index (70%) and Numis UK Smaller Companies (excluding investment companies) Index (30%) produced a total return of 22.4%, which meant that for the fourth year in the last five the Company’s NAV delivered outperformance.

There has not been a wholesale rush into equities, given the risks that still remain. While the European Central Bank took definitive steps to avert the threat of a collapse of the euro last summer, it remains to be seen whether some states within the eurozone will politically be able to last the course given the pain they are suffering from enforced policies of austerity.

The UK, US and Japan also have substantial fiscal deficits and in these circumstances there is no certainty of what effect the scale of quantitative easing will have in the medium term, or how markets as a whole will react when central bank bond buying eventually winds down, which must happen sooner or later.

Chairman Anthony Townsend said: “Over three, five and ten years the NAV total returns have far exceeded the company’s benchmark returns, and an investment of £100 in the company’s shares ten years ago with dividends reinvested would now be worth almost £600.”

Lead manager Peter Ewins commented: “This was a pleasing year for the team involved in managing the fund, as we added value in stock selection across the board for the second year in a row. Clearly the aim is to reward new and long-standing shareholders by continuing to deliver good performance over the long term”.

Highlights of the F&C Global Smaller Companies FY results to 30 April, 2013 include:

   – Performance ahead of benchmark, with an NAV total return of 28.1% against the benchmark return of 22.4%

   – The total dividend for the year is 6.50p per share and represents an increase of 15.5% over the 5.63p per share for the previous year

   – The company’s dividend will have increased for 43 years in a row if approved by shareholders

   – 3,592,112 new shares issued during the year


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