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LONDON (Alliance News) - Lowland Investment Company PLC said Tuesday that it underperformed its benchmark index over its most recent financial year, as holdings in smaller companies received a lesser boost from the weak pound.
Lowland reported a net asset value total return for its financial year ended September 30 of 12.2%, compared to the FTSE All-Share Index total return of 16.8% over the same period.
Lowland's NAV per share stood at 1,423.0 pence at September 30, up from 1,318.0p at the same date in 2015.
The company's share price rose to 1,337.0p at the close of the financial year, having started it at 1,287.0p.
Shares in Lowland Investment were up 0.2% at 1,390.09p Tuesday afternoon.
For the year the company paid dividends worth 45.0p, up 9.8% from 9.1p in the prior year.
"It was year of handsome absolute returns, but our performance was clearly disappointing relative to the index. The main cause of this underperformance is Lowland's exposure to medium and smaller companies in the index. They underperformed large companies as they benefited less from sterling depreciation," said Peter Troughton, chairman of the company.
"Next year, inflation may rise as the lower level of sterling pushes up the cost of imported goods. If higher inflation becomes established and fiscal policy is loosened, then short-term interest rates will need to rise. After thirty years of falling interest rates, and nearly ten years of 'emergency' rates, stock markets may react badly to a higher rate environment. We certainly expect a period of volatility for all stock markets, exacerbated in the UK by the inevitable drip of Brexit negotiation stories," added Troughton.
By Adam Clark; adamclark@alliancenews.com
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