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Interim Results

Dunedin Smaller Cos lags benchmark

20 June 2016 07:43

Dunedin Smaller Companies Investment Trust's net asst value per share rose by 0.7% in the six months to the end of Aprilon a total return basis. This compares with a total return of 1.3% from the benchmark index, the FTSE SmallCap Index (excluding investment companies).

Chairman Norman Yarrow said: "Although markets increased over the period as a whole, there was significant volatility, with sentiment dominated by concerns over slowing growth in China and the weakness of commodity prices, in particular oil, which fell to below $30 per barrel for the first time in 12 years. Towards the end of the period, sentiment improved as the Chinese authorities and European Central Bank announced further measures to stimulate their economies, resulting in an increase in investor appetite for risk."

Looking ahead, he said: "The prospects for global economic growth remain uncertain, with China central to the outcome. The Chinese authorities have tilted policy away from reform and towards fiscal stimulus and for the time being this looks set to support growth. In the UK, although the recovery is continuing, it remains fragile and the timing of interest rate increases keeps moving further out. The uncertainty caused by the referendum on EU membership has been unhelpful in the context of both investor and corporate sentiment.

"With so much uncertainty, stockmarkets are likely to remain volatile and, at current levels, equity valuations appear reasonably full, especially when expectations of slower corporate profit growth are taken into account. Smaller companies are, however, more attractively valued at the current time although investors are paying a premium for quality businesses, and this is evident in the valuation of the Company's holdings."

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Related Company: DNDL

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