The FTSE AIM Index (TR) suffered its largest ever quarterly drop in value in the quarter just ended – down more than 35%. Against this background, it would have been virtually impossible to generate positive performance and so it turned out. A relative outperformance of approximately 10% should have been a cause for celebration, however the Fund fell 25% in absolute terms.
The markets generally, and small companies in particular, suffered from extreme volatility and investor risk aversion. The market conditions are as challenging as any that we have experienced in over 25 years of investing. Although well financed, smaller companies should be less impacted by the global financial concerns, this has not been sufficient for them to avoid being materially de-rated.
In the current environment, there are no places to hide and tinkering with portfolios tends to be unprofitable. Hence, there were few changes over the quarter. There were no new investments and just a few top ups. To finance this, a couple of the smaller holdings were realised earlier in the quarter.
We believe that the Fund is well positioned to take advantage of a stockmarket recovery as and when it comes. While bear markets and economic slowdowns are unpleasant at the time, they are a necessary evil / reality check as equity investment should be a combination of fear & greed and risk & reward.
Source; SVM to 30.09.08
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%
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|
AIM
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77.0
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|
OFEX
|
9.5
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Unquoted
|
13.5
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