Global Smaller Companies Trust underperforms in volatile first half

(Sharecast News) - Small cap investor Global Smaller Companies Trust has decided to keep its interim dividend unchanged after a slight underperformance against the benchmark during a volatile fiscal first half ended 31 October. The company, which invests in growing, profitable businesses listed on global stock markets, said it would maintain its first-half payout to shareholders 0.70p per share, with revenue returns per share rising by just 0.7% year-on-year during the half.

Net asset value (with debt at fair value) increased to 190.7p per share, marking a total return of 15.6% over the six months, well below the benchmark total return of 21.6%.

During the six-month period, GSCT's share price rose 15.1% to 168.6p.

"Over the six months, the market became increasingly speculative with the lowest quality companies significantly outperforming the highest quality businesses. Unprofitable smaller companies rallied strongly as did those on the highest valuations," said lead manger Nish Patel.

"This was particularly challenging for the company's investment philosophy of taking a long term, conservative approach to investing in good quality, growing businesses when they become available at an attractive valuation."

Looking ahead, the company said the market backdrop "calls for caution rather than aggression" amid an uncertain investment environment.

"Whilst our conservative style of investing is currently not in vogue, we remain confident that it will come back into favour and that it is the right approach to take over the long term," Patel said.

The stock was down 0.3% at 176.92p by 0834 GMT.