(Alliance News) - European Smaller Cos Trust PLC on Tuesday reported an increased net asset value and positive return in its latest year, although its chair warned of moderate but persistent inflationary headwinds to come.
The London-based FTSE-250 investor, which backs small and medium-sized companies in Europe, said its NAV per share was 184.26 pence at June 30, up from 162.76p at the same time one year prior.
European Smaller shares were up 0.5% at 144.25p in London on Tuesday morning.
NAV total return for the year that ended June 30 was positive 16.4%, surpassing the positive 10.0% return delivered by the benchmark Euromoney Smaller European Companies (ex UK) index.
Chair Christopher Casey called financial 2023 "a welcome improvement" on the previous year, during which the trust's NAV total return was negative 21% compared with the Euromoney index's negative 17%.
European Smaller also declared a 3.25p per share final dividend, up 4.8% from 3.10p the year before. This brought the total payout to 4.70p, up 8.0% from 4.35p.
Looking ahead, European Smaller does not expect inflation to remain at high levels. It is however "of the view that moderate inflation and elevated interest rates, compared to the recent past, are likely to be a persistent feature of the global economy going forward".
Nonetheless, Casey said a 'soft landing' is "increasingly probable" despite various headwinds such as rising interest rates, inflation and the Ukraine conflict, causing the "spectre of recession" to haunt global markets. He said smaller companies "are a good indicator of the economic cycle improving", and that European Smaller is "optimistic" that it can "take advantage at this stage of the cycle".
"The valuation aware approach employed by the fund management team should be able to flourish in a market that has some very exciting companies trading at extremely low valuations," Casey added.
"Whilst Europe doesn't have the global tech titans which have dominated the market in recent years, the plumbing of the new economy has been delivered by smaller companies based in Europe and we are confident that the fund management team can continue to deliver attractive returns for you."
By Emma Curzon, Alliance News reporter
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European Small. (ESCT)