(Alliance News) - Alliance Trust PLC on Thursday reported a fall in net asset value in the first half of 2020.
Shares in the equity investment trust were trading 0.3% higher at 812.52 pence each on Thursday afternoon in London.
As at June 30, Alliance's NAV per share was 837.2p, down from 836.8p a year before and 875.9 pence on December 31.
An interim dividend of 7.190p was declared, up 3% from 6.980p a year prior. The company said that unless it suffers greater market uncertainty than expected in the second half of the year, it intends to maintain that same rate of dividend growth for the whole year.
The investment trust's NAV total return in the six month period was negative 3.5%, underperforming its benchmark, the MSCI All Country World Index, which returned positive 0.5%. The company blamed the underperformance on a challenging market backdrop, adding that during the half-year the benchmark's performance was skewed by very strong returns from the largest cap stocks.
Looking ahead, investment manager Willis Towers Watson said: "The Covid-19 pandemic is not yet over. There is the possibility of a second wave creating further social and economic disruption. We do not yet know how quickly economies can recover; for how long governments can run up such enormous deficits; or the effect of central bank intervention in bond markets. There is a credible case for a speedy recovery; but just as credible is the possibility that weakness persists into next year and beyond.
"While the initial impact may be deflationary, via labour market weaknesses, the creation of new deposits by central banks could eventually lead to a rise in inflation, which could trigger a rise in interest rates and increase debt burdens considerably. Given the wide range of policy responses, now is not the time to make heroic bets. Our portfolio is well-diversified and relies on individual company performance rather than gambling on macroeconomics," it added.
By Ife Taiwo; ifetaiwo@alliancenews.com
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