Aberdeen Smaller Companies High Income reports that its net asset value on a total return basis increased by 13.4% over the twelve months to 31 December 2015. This compares with a rise in the FTSE SmallCap (excluding investment companies) Index of 13.0%. The FTSE 100 Index fell by 1.3%. The narrowing of the discount, to 13.6% at the year-end, resulted in an increase of 16.6% in the share price. The Board has declared four interim dividends, totalling 6.65p (2014 – 6.45p) representing an increase of 3.1% on last year.
They reduced the proportion in bonds in the portfolio to around 3% of the fund, reflecting the low yields available as a result of government interference in the market.
The Board have considered the name of the Company and whether it reflects the objective of the Trust. Although the Trust delivers a yield at a premium to its benchmark index, the dividend yield of over 3% is not considered to be high relative to other high income funds. In addition, the Trust seeks to derive its income primarily from equities and therefore generally holds less bonds than more commonly found in other high income funds.
It is therefore the Board’s intention to change the name of the Company to “Aberdeen Smaller Companies Income Trust plc.” This will be done by a Directors’ resolution, exercising the powers conferred under the Company’s articles of association and will be effective from the conclusion of this year’s AGM.
Since the end of the Company’s year, Phil Webster, the member of the Aberdeen investment team most associated with the Company in recent years has left the Investment Manager. They say shareholders will be aware that the Aberdeen investment process is both disciplined and team-based. The Board are pleased to confirm that they remain happy with the management arrangements in place for the Company and they say they have already developed a good relationship with his replacement, Jonathan Allison.
The managers say the company’s returns over the year were broadly based by sector and stocks. An underweight position to Oil & Gas and Mining added nearly 200 bps of outperformance. General Industrials, Pharmaceuticals and Food & Drug Retailers all added to performance whereas the Real Estate sector was one of the main areas of underperformance, due more to an overall underweight than the performance of any individual holdings.
The biggest underperformer, in stock terms, this year was BBA Aviation, which provides flight support and aftermarket services through their market leading position in the U.S. business jet market. This weakness is, in their opinion, an overreaction to its acquisition of Landmark, a deal which nearly doubled the size of the business post a sizeable rights issue. They continue to believe that the deal makes strategic sense and cements their dominance but accept that it will take time to extract the full synergies of the network they have acquired. It also dilutes down some of the weaker areas of the group.
ASCH : Change of name and manager for Aberdeen Smaller Companies High Income