Standard Life trust manager Nimmo offers optimistic outlook for UK smaller companies

The £550 million Standard Life UK Smaller Companies Trust has reported a second year of negative absolute returns but its veteran manager remains “very optimistic” about the fund’s long-term prospects.

Harry Nimmo is the well-known manager of Standard Life UK Smaller Companies Trust.

For the year ended 30 June, the trust’s net asset value total return was -0.5 per cent. The share price total return was -0.1 per cent.

However, the total return of the trust’s benchmark index, the Numis Smaller Companies plus AIM (ex-investment companies) Index, was significantly worse at -10.7 per cent.

A final dividend of 5p per share was declared, making a total payment for the year of 7.7p, in line with 2019.

Harry Nimmo, manager of Standard Life UK Smaller Companies Trust, said: “It is disappointing to see that this is the second year of negative net asset value total returns for the company, albeit only by 1.1 per cent last year and 0.5 per cent this year.

“Given the turmoil of the last couple of years we would say that this is actually a good result. The chaos over Brexit and the political instability of the post-election May government has been almost forgotten in contrast to the real and immediate dangers of Covid-19.

“Our view is that we have passed the worst in stock market terms and that 19 March might have been the low point. However, with the potential for further spikes in Covid outbreaks, a vaccine some way off, and a difficult negotiation on Brexit ahead, the recovery may be punctuated by setbacks.”

He added: “We actually feel more confident about smaller companies now. The downturn that we have been predicting for at least five years now has arrived.

“There are still a wide range of UK companies coming through that match our investment criteria, with a number of new smaller names having been added in the recent past.

“Investing in smaller companies should be viewed as a long-term investment and we have no doubt that patient investors will be rewarded in the longer term. Our stable process has been seasoned by four full economic cycles. We remain very optimistic about the prospects for the portfolio and the company in the long term.”

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