F&C US Smaller Companies posts strong half-year results

F&C US Smaller Companies saw its net asset value (NAV) per share rise by 21.2% in the six months to 31 December 2009 as sentiment improved towards smaller companies and economic recovery in the US gathered strength; this slightly lagged the benchmark return of 25.5%.

However, the half-yearly financial results, released to the London Stock Exchange on Monday, saw the investment trust, managed by Robert Siddles at F&C Investments, build on very strong full-year performance to 30 June 2009, when NAV per share rose 8.7% compared with a 10.9% decline in the benchmark Russell 2000 (sterling adjusted) index. Over two years to 31 December 2009 NAV per share for the trust grew 23.2% compared with an increase of only 0.6% for the benchmark.

Siddles focused on two new areas of investment over the six-month period, both of which had previously lagged the market. The first was aerospace & defence, where new stocks included rocket manufacturer Orbital Sciences. The second was defensive stocks such as baked goods company Flowers Foods. Profits were taken from energy-related stocks as the oil price rose. The portfolio benefited most from its holdings in office supplies manufacturer ACCO Brands and technology specialists Bottomline Technologies and Avocent.

Commenting on the outlook for the US small-cap sector, trust chairman Gordon Grender (a respected US equity fund manager with GAM) said: "Small companies should benefit from economic recovery and provide a hedge should inflation accelerate. The outlook for the dollar could improve as the economy regains strength."