By Kristy Dorsey
“Significant and ongoing changes” will continue across the economy, a senior financial executive has warned, but a gradual return to something “resembling” pre-Covid normality may also be underway.
Liz Airey, chairman of Standard Life UK Smaller Companies Trust, said the near-term uncertainties from the combination of Brexit and Covid reinforces the need for investors to take a long-term approach. But there is also “hope” for a gradual return to more stable conditions, which should improve the prospects of smaller firms while giving them greater visibility.
“We must be mindful that [Brexit and Covid] have brought significant – and ongoing – changes in the underlying operating and economic environment for our investee companies which bring both increased opportunity and risk,” Ms Airey added.
READ MORE: UK recovery may be ‘punctuated by setbacks’ amid coronavirus crisis and hard Brexit 'possible'
The £753 million trust, which is changing its name to abrdn UK Smaller Companies Growth Trust, posted a net asset total return of 41.9 per cent during the year to June 30. This was ahead of the 0.5% decline the previous year, but still short of the 52% return achieved by the trust’s reference index.
Investment managers Harry Nimmo and Abby Glennie said the trust has less invested in recovery stocks, which benefit more when the market rebounds from an economic crash, than its reference index. The effects of this have started to wane, with a relative outperformance in April and June that was higher than any monthly return since 2015.
Managers are proposing to use revenue reserves to make up a shortfall in maintaining the dividend payment in line with last year. A final dividend of 5p per share is proposed, making a total payment of 7.7p for the year.
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