Tough time for small caps

F&C’s Global Smaller Companies Trust saw a 26% fall in its share price over the past six months, according to its interim results released today.

The net asset value of the fund, on a total return basis with final dividend re-invested, contracted by 23.9% since April 30.

Despite the fall the trust outperformed its composite benchmark consisting of the total returns of the Hoare Govett UK Smaller Companies Index and the MSCI World ex UK Small Cap Index, weighted 40% and 60% respectively. This fell by 27.7% over the same period reflecting the difficulties small-cap investors have faced over the past year.

The fund decreased its portfolio exposure to Britain since April from 36.9% to 29.1%, which has proven a defensive move. However, most of this money went into American holdings increasing the fund’s allocation from 34.6% to 47.3% on the belief that American stocks were set to recover in the second half of the year.

Anthony Townsend, the chairman of the trust, says in a statement that the hope of a rally in American equities in 2008 was “misplaced” but that he still says they are poised to recover earlier than elsewhere in the world.