Shires Smaller Companies, one of the investment trusts formerly run by Glasgow Investment Managers, has underperformed during a period of upheaval in its first half-year under Aberdeen Asset Management.

Shires Smaller Companies, one of the investment trusts formerly run by Glasgow Investment Managers, has underperformed during a period of upheaval in its first half-year under Aberdeen Asset Management.

Shires said last September it was sticking with its existing managers after the takeover, but in March this year three of the four-strong investment trust team resigned from Aberdeen.

The trust has seen its size shrink from £50.8m at the end of last year to £36.3m, a 25.7% loss of asset value against the 17.4% of the benchmark small-cap index.

Aberdeen spokesman Kenneth Harper said the trust was now managed by Phil Webster and co-manager Susan Anderson, the surviving member of the former Glasgow team.

"Susan was at Glasgow for more than 10 years so there is that continuity being provided."

However, he went on: "There has been a change in the portfolio given that Aberdeen has a pretty set process, changes have definitely been made."

Shires aims for a high and growing dividend and capital growth from a portfolio invested in UK smaller companies and fixed income securities.

It has reduced gearing sharply since the beginning of the year, from 85% down to a current 70%.

The total return, how- ever, beat the benchmark, helped by a more than halving of the discount from 17.6% to 8.1%. At June 30 the trust's dividend yield had jumped from last year's 8.1% to 10.2%.

Harry Cathcart, chairman, said the trust had been handicapped by a zero weighting in oil and gas, and a slump in several other stocks including John Menzies.

He added: "Smaller companies are also perceived as more vulnerable in an economic downturn and have been indiscriminately sold off by investors moving into cash and bonds."

He said current valuations of small cap stocks "offer a number of opportunities for the longer-term investor".