Listed BMO Global Smaller Companies investment trust released its results for the year ended 30 April today and has decided not to stray from its policy of hiking its dividend. This is the 50th consecutive year the trust has done so.
While this should bring cheer to investors in the closed-ended fund, the other metrics for the year most certainly will not. The fund’s NAV fell by 13.8 percent to 119.7p on a total return basis which although, as the company points out, this is ahead of the benchmark loss of 14.1 percent, it’s still hardly good news.
In share price terms, again it was a troubling year losing 16.5 percent and seeing its discount to NAV widen to 7.3 percent. The management of the trust took the decision to remove gearing as the outlook for corporate earnings deteriorated in the final quarter and this seems a prudent move in hindsight as it may have heightened losses if still in play.
The company mentioned in its statement to the markets the ‘tough year for smaller company equities due to weakening global economic momentum and in the final quarter the impact from the coronavirus’ which is perhaps an understatement.
However, it did also point to a positive asset allocation positioning with the underweight in the UK and overweight in Japan proving beneficial.
Chairman Anthony Townsend, who is stepping down this year, said in a statement: “Before the pandemic struck, the twists and turns of the US and Chinese trade war, Brexit, an election in the UK, political tensions in the Eurozone and a collapse in the oil price, to name but a few topics, had already created periodic bouts of volatility in the markets. Investment in equities should always be made taking a long-term perspective and while the fall in NAV this year was disappointing, shareholders should remember that it came after seven years of consecutive positive returns.”
He added that the trust’s record of hiking its dividend is something ‘few other trusts or companies can match’.
