LONDON (Alliance News) - JPMorgan Smaller Companies Investment Trust PLC's chairman said Wednesday the global economy was suppressing business activity, as it reported a negative total return on net assets in its recent half year, although this slightly beat its benchmark.
The total return on net assets before dilution was negative 3.6%, and negative 2.9% after dilution, which compares with negative 5.9% for the benchmark index. The return to shareholders was 0.6%, with the return from a combination of five ordinary shares and one subscription share being 0.8%. The outperformance of the shares reflects a narrowing of the share price discount to diluted net asset value to 14% from 17%.
UK equity markets have risen since the period end, with the diluted net asset value increasing by 1.3%. The share price, however, has declined by 1.2%, reflecting a widening of the discount to 16.3% from 14.3% since January 31.
"There is much uncertainty confronting the global economy at the moment, both economic and political. This inevitably suppresses business activity and consumer spending and has resulted in an overall reduction in equity market levels. To that we can add our own particularly domestic concerns, with the forthcoming vote on our relationship with Europe a prime example," said Chairman Michael Quicke.
"Successful investing, particularly in smaller companies, requires a long-term perspective. Despite the concerns, there are reasons to be cautiously optimistic about the future. The UK economy remains in reasonable shape, with respectable growth, falling unemployment and subdued inflation. Whilst the fall in the price of oil has caused stress in certain areas, cheaper energy will in due course benefit economic activity and reduce costs for most businesses," Quicke added.
"Our managers continue to invest in high quality smaller companies, with significant earnings growth prospects and strong financial characteristics irrespective of the macroeconomic outlook. Whilst the board expects a continuing period of volatility in markets whilst investors digest current uncertainties, we are confident that your company will continue to deliver good returns for shareholders over the long term," Quicke said.
Shares in JPMorgan Small Companies Investment closed down 0.6% at 818.27 pence on Wednesday.
By Hannah Boland; hannahboland@alliancenews.com; @Hannaheboland
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