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The Company currently conducts its affairs so that securities issued by Aberdeen Smaller Companies High Income Trust PLC can be recommended by financial advisers to ordinary retail investors in accordance with the FCA’s rules in relation to non-mainstream Pooled investment products (NMPIs) and intends to continue to do so for the foreseeable future.
The Company’s securities are excluded from the FCA’s restrictions which apply to non-mainstream investment products because they are securities in an investment trust.
The value of investments and the income from them may go down as well as up and investors may get back less than the amount invested. The tax benefits relating to ISA investments may not be maintained. Please refer to the Key Facts documents contained in the ISA/Share Plan Brochure & Application form for general and specific investment risks attaching to the individual trusts.Read the detailed Risk Warning
Past performance is not a guide to future results.
See latest monthly factsheet below for performance history.
At close 16-Apr-2014Ord
|Net Dividend Yield||2.90%|
Source: Morningstar, NAV = Net Asset Value, excluding income.
40 Princes Street,
Registered in Scotland as an Investment Company Number 137448
The objective of the Company is to provide a high and growing dividend and capital growth from an investment in a portfolio invested principally in the ordinary shares of smaller UK companies and UK fixed income securities.
In this webcast, Phil Webster gives an update covering the half yearly report to 30 June 2013. The update will cover a wide range of subjects including performance, a sector breakdown, twenty largest investments and an outlook.
It was another positive month for smaller companies, with the FTSE SmallCap (ex Investment Companies) index up 2.9% on a total return basis. Smaller companies failed to keep up with the broader UK market with the FTSE All-Share Index up by 5.2%, although this is following substantial outperformance by small caps over the past twelve months. February saw an improvement in investor sentiment, with UK macroeconomic data continuing to highlight an improving economic picture. Inflation continued to fall in the UK, declining to 1.9%, which marked the first time that it had been below the Bank of England’s upper target for four years. The Monetary Policy Committee left interest rates unchanged again but noted the increased momentum of recovery in the domestic economy and concluded that a rise in interest rates would be gradual. Overseas, the recovery in developed markets continued with the US posting fourth quarter GDP of 2.4%, which whilst slower than the 3.2% reading in the previous quarter, indicated that the economy continues to grow at a healthy rate.
It has been a busy month for company reporting and by and large earnings expectations have been met by our holdings, with few surprises. Looking ahead, outlook statements are cautiously positive but one feature worth mentioning is the impact of the strengthening of sterling against other currencies for our more international holdings. We see geographic diversification within our companies as a positive attribute, but if exchange rates stay where they are it will impact the reported earnings figures for these holdings in 2014. We are already seeing this currency translation effect result in some downgrades to profit forecasts for the coming year. So far investors are being quite forgiving of these cuts but it does mean that multiples are expanding further, increasing valuations which in many instances already look quite extended. With this is mind we remain vigilant when looking at valuations, but it is encouraging to see that underlying trading is generally sound, with companies on-the-whole in good shape and executing on their strategies effectively.
In terms of portfolio activity, we introduced Manx Telecom during the month. The business has a dominant position as the supplier of fixed and mobile communication services on the Isle of Man. The company also has two areas of growth in the form of data centres on the island and off island services. The barriers to entry for the business are high, as given the small size of the market competition are unlikely to think it worth their while to challenge them. This gives us confidence in the durability of their strong cash flow generation which supports both the attractive 6.1% dividend yield as well as the company’s growth strategy. This holding was funded by exiting our position in John Menzies, which is seeing a fairly buoyant market in the aviation business but continues to face structural headwinds on the distribution side which will become increasingly difficult to offset by cost cutting in the medium term. In addition we top sliced RPC following strong relative performance.
Looking ahead, although a variety of challenges remain, we believe that those companies with strong competitive positions, experienced management teams and healthy financial characteristics will be able to continue to deliver attractive returns over the longer term.