LONDON (Alliance News) - Aurora Investment Trust PLC on Monday said its portfolio suffered from the struggling global economy and weak oil prices, and believes investor confidence will remain low due to tough market conditions in the US, UK and a slowdown in China.
Aurora reported a pretax loss of GBP104,000 in the six months ended August 31, narrower than the GBP168,000 loss recorded a year earlier. During the recent half year, Aurora generated GBP536,000 in investment income compared to GBP515,000 in the first half of 2013.
Net asset value per share was 186.98 pence on August 31, down 2.5% from 191.78p on February 28.
"Overall the six months under review, markets have traded in a narrow range. The FTSE 100 has produced a tiny positive performance, but the FTSE all-share index declined by 0.7%, reflecting a return to under-performance by smaller, listed companies. This has been detrimental to our portfolio of small growth companies...Regrettably the fund fared even less well; the net asset value declined by 2.5%, for which I apologise to investors," said MJ Barstow of Mars Asset Management, the investment manager for Aurora.
"Looking ahead, the point at which the very significant monetary stimulus of recent years is withdrawn is likely to commence in the UK, followed by the US, but the issue remains when. In so far as economic recovery is not derailed in the process, stock markets should benefit in what will remain by historical standards a low interest rate environment," the investment manager added.
"The balance of the portfolio comprises large, UK listed, stocks, particularly in the house building sector, and investments in domestic mid and smaller cap stocks with exciting growth prospects. There is also a section of the portfolio oriented towards energy and metals, which should benefit from the recovery of the world economy and continuing growth in developing markets. This part of the portfolio has also underperformed over the period, largely as a result of weaker than expected oil prices," Barstow said.
"The combination of deflation and stagnation in Europe, an apathetic US president who is bored of governing, a slowdown in China, near hostile conditions in the Ukraine and fierce fighting and the resumption of bombing in Iraq do not bode well for strong investor confidence," Barstow said.
Aurora shares closed down 2.2% at 149.57 pence per share Monday.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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Aurora Inv.tst. (ARR)