Herald Investment Trust’s results for the year ended 31 December 2014 show its asset value outperforming its benchmark but shareholders losing money as its discount widened. The total return on net assets for the year was 1.3% while a blend of the Numis Smaller Companies Index plus AIM excluding investment companies and the Russell 2000 (small cap) Technology Index (in sterling terms) returned -0.2%. Herald’s discount widened from 14.7% to 19.0% however and this meant the return to shareholders was -3.8%. Today Herald’s discount is 18.7% which compares unfavourably to Allianz Technology, Polar Capital Technology and the average UK smaller company trust – on discounts of 8.6%, 2.3% and 13.0% respectively.
The report says Herald’s UK investments outperformed the Numis index while the US investments marginally underperformed the Russell index. Large cap. US technology stocks, not present in the fund’s portfolio, did particularly well. In the UK, not holding a number of stocks was good news including Quindell, Monitise, Carclo, Aveva, Spirent, Blinkx and Xaar. The manager says 2014 seems to have been a year when avoiding the blow-ups was more important than being in the winners.
Allocate Software gave the best monetary return for the year following the takeover by private equity. The weakest returns came from Digital Barriers, where the market has punished an early stage company failing to develop as quickly as hoped, and Euromoney and Telecom Plus, which have been excellent long term performers, but gave back profits in 2014.
HRI : Allocate Software boosts Herald’s NAV but discount hurts investors