Dunedin Smaller Companies Delivers Absolute Return But Lags Benchmark

LONDON (Alliance News) - Dunedin Smaller Companies Investment Trust PLC, which targets long-term growth by investing in smaller companies, Monday said its net asset value increased by 1.65% in the first half of its financial year, an underperformance against the trust's benchmark index.

Although the benchmark, the FTSE Small Cap Index excluding investment companies, increased by 5.19% over the six months the end of April, Dunedin Smaller Companies Chairman Lord Dalhousie said that a six-month period is "too short a timescale to make meaningful judgements regarding performance" due to the trust's long-term investing approach.

Managed by Aberdeen Asset Managers Ltd, the trust also delivered income growth in conjunction with its capital increase, with revenue return per share rising to 2.51 pence, from 2.06 pence.

"An element of this was due to the timing of investment decisions and ex dividend dates," Lord Dalhousie said. "However, the portfolio did deliver underlying growth in earnings and this has enabled the board to declare an increased interim dividend of 2.10 pence," the Chairman added.

Last year's interim dividend was 2.05 pence.

"Both absolute and relative valuations of UK smaller companies have moved ahead strongly over the last year and, through the period, equity markets generally moved higher as the economic recovery in developed markets has strengthened. Growth in profits, however, has been rather more anaemic and, for Europe as a whole, it has been negative for the last three years," Lord Dalhousie said.

"Although 2014 started the year with an expectation of near double digit earnings growth, such expectations have reduced in recent months as analysts have factored in the increasing strength of sterling across the market," he added.

Performance to 30 April 2014

 *The total return for share price and net asset value is calculated on the basis of reinvesting dividends to shareholders on the ex-dividend date.

Source: Aberdeen Asset Management, Morningstar & Factset

Dunedin Smaller Companies shares were Monday quoted at 207.01 pence, down 0.4%.

By Samuel Agini; samagini@alliancenews.com; @samuelagini

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