European and Japanese smaller companies have outperformed all others in the investment company sector, according to the Association of Investment Companies.
Benefiting from a resilient stock market, which saw the FTSE 100 index rise to 7,312.72 at the end of June, the smaller companies sector has enjoyed a buoyant first six months of 2017.
European smaller companies has seen a rise of 32 per cent on its share price total return, while the Japanese smaller companies sector enjoyed a 23 per cent increase over the same six-month period.
The European and Country Specialists: Asia Pacific sectors both also grew, by 22 per cent and 20 per cent respectively.
Property Direct – Europe was the fifth greatest achiever with 19 per cent on a share price total return basis.
Of the top 10 performers only UK Smaller Companies, in sixth with 17 per cent growth in returns and Sector Specialist: Biotechnology & Healthcare, prevented the total dominance of overseas investments.
| Top 10 best performing investment company sectors – lump sum % share price total return | |
| Performance measure | PriceTotRe |
| Performance from | 31/12/2016 |
| Performance to | 30/06/2017 |
| Duration | 6 months |
| Overall Weighted Average ex VCTs | 10.03 |
| AIC sector | |
| European Smaller Companies | 32.3 |
| Japanese Smaller Companies | 22.82 |
| Europe | 22.05 |
| Country Specialists: Asia Pacific | 20.42 |
| Property Direct - Europe | 18.86 |
| UK Smaller Companies | 17.3 |
| Asia Pacific - Excluding Japan | 15.62 |
| Sector Specialist: Biotechnology & Healthcare | 14.65 |
| Global | 14.14 |
| Japan | 14.03 |
| Source: AIC using Morningstar |
Annabel Brodie-Smith, communications director at the Association of Investment Companies, said: “The fall in the value of sterling since the Brexit vote, together with positive European election results, has contributed to the strong performance of the European investment company sectors.
"Nonetheless, the 32 per cent share price total return from the European Smaller Companies sector over the six months to the end of June is an impressive achievement.
“Investment companies generally perform well in strong markets and the first half of the year reflects this, with the average company up 10 per cent and the average discount narrowing from 3.8 per cent to 1.7 per cent.
"Of course, it is interesting to look at the top performing sectors but there’s no guarantee that this performance will be repeated.”
Liz Evans, director of portfolio management at Cavendish Asset Management, said: “It is certainly the case that the fall in sterling has been helpful to overseas investments, along with the latest tranche of cash for Greece and a more positive outlook in France, post their general election.
“Globally, the economic climate is stabilising, and our position is that the outlook remains positive for overseas investments.”
The 2017 French presidential election was held on 23 April and 7 May 2017.
As no candidate won a majority in the first round on 23 April, a run-off was held between the top two candidates, Emmanuel Macron of En Marche and Marine Le Pen of the National Front, which Mr Macron won by a decisive margin on 7 May.
dan.moore@ft.com
