(Alliance News) - Aberforth Smaller Cos Trust PLC on Thursday said the year just gone was good for UK equities, however it cautioned on the UK's "unspectacular" performance and an "uninspiring" budget.
The investor in UK smaller companies looking to outperform the Deutsche Numis Smaller Cos Index said net asset value per share rose 8.5% to 1,666.95 pence each as of December 31, from 1,536.73p a year ago.
NAV total return was 12.1% in 2024, outperforming the benchmark, the Deutsche Numis Smaller Cos Index, excluding investment companies, which had a total return of 9.5%.
"It was a good year for UK equities. This cannot easily be explained by the global investment backdrop since macro economic and geopolitical uncertainty remained elevated. Most major economies, with the notable exception of America’s, were in the doldrums. Meanwhile, elections in several countries brought results that will require further elections in the new year to resolve. The presidential election in America did produce a clear winner, but the world now waits to see the substance of Donald Trump’s policies including the much vaunted trade tariffs," the company said.
It added: "Amid this, the UK’s economic performance was unspectacular as it emerged from the recession in the second half of 2023. However, interest rates started to decline and there have been encouraging signs that activity has started to recover. On the political front, Labour’s decisive victory heralded some political stability, though October's budget was unconvincing and undeniably bad for businesses. Nevertheless, the impression developed through 2024 that the UK is less of an outlier in both political and economic terms than it seemed just over a year ago."
Aberforth Smaller proposed a final dividend of 30.00 pence each, up 5.1% from 28.55p a year ago.
Excluding special dividends, that would bring the total payout to 43.60p, up 5.1% from 41.50p.
Aberforth Smaller proposed a special dividend of 6.00p, slashed by 33% from 9.00p a year prior. This reduced the total payout including special dividends by 1.8% to 49.60p from 50.5p.
Looking ahead, the company is cautious, citing Labour's budget, which it noted was "uninspiring and impinges upon private sector growth, whatever the government's rhetoric about employers' national insurance contributions."
Despite this, it added: "It is worth returning to the way in which small UK quoted companies have dealt so well with recent challenges such as Brexit, the pandemic and supply chain disruption. Even in 2024, when companies reported results affected by recession, many grew their dividends and many were able to enhance shareholder returns with buy-backs. In this, they have been helped by their strong balance sheets and experienced boards of directors. Given their demonstrable flexibility, resilience and adaptability, it is reasonable to expect them to cope well with further change."
Aberforth Smaller shares were 0.2% higher at 1,438.28 pence each on Thursday afternoon in London.
By Tom Budszus, Alliance News slot editor
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