LONDON (Alliance News) - Lowland Investment Co PLC Tuesday said it outperformed the FTSE All-Share Index on a total return basis in the first six months of its financial year, boosted by its "bias towards smaller companies and the use of a reasonable level of gearing".
In a statement, Lowland said its net asset value total return was 5.6% in the six months ended March 31, ahead of the FTSE All-Share Index total return of 5.3%. Net assets amounted to GBP376.8 million at the end of March.
"Smaller companies individually can be volatile but investment in a diversified portfolio of stocks reduces the risk and has led to strong capital performance," Chairman Peter Troughton said.
"Successful and expanding companies provide long-term sustainable dividend and capital growth, which is our own objective. Reflecting the trend in the investment trust industry, during the period under review the share price went from a premium of 0.7% to a discount of 7.6%. At the time of writing the discount has narrowed to 5.3%," Troughton added.
The chairman said the company is "positive" about the overall outlook for the economy.
"We retain a reasonable level of gearing at 15.3%. This is the best barometer of our view about the value of equities," the chairman said, referring to the trust's use of some debt to increase returns.
"The cash generation of the underlying companies in the portfolio is strong and is allowing them to reduce their debt. This in turn frees profits for paying shareholders. Companies are increasing both regular dividend payments and announcing one-off special dividends. This process makes equity more attractive in comparison to other asset classes such as bonds, cash or property," Troughton added.
"The portfolio will retain its exposure to industrials as strong operating performance from these companies is gaining momentum. In addition, some smaller growth companies, particularly university spin-outs, have exciting growth prospects that are becoming more evident," he said.
Shares in the investment company were down 0.7% at 1,400.00 pence on Tuesday.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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Lowland Inv. (LWI)