Shires' yields rise but discount falls

The Shires Smaller Companies trust said its discount narrowed and its yield increased over the first half of the year, although its NAV underperformed its UK small-cap benchmark.

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The trust lost 25.7 per cent for the period, while the FTSE Small Cap Ex Investment Companies index lost 17.6 per cent against an 11.2 per cent decline in the FTSE All-Share.

But the trust's yield went up from 8.1 per cent to 10.2 per cent, while its discount decreased from 17.6 per cent to 8.1 per cent.

Once the discount was incorporated, the total loss for shareholders came to 16.5 per cent, an improvement of 110 basis points on the index.

Chairman Henry Cathcart said the total return of the trust's equities was behind its benchmark because of its zero weighting in oil and gas and company-specific problems in support services, an overweight in the portfolio.

Over the period, the trust benefited from merger and acquisition speculation in the sector, notably from Titan attempting to buy portfolio holding Titan Europe.

However, underperformance in companies such as John Menzies dragged the fund lower.

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