As previously discussed, smaller companies tend to outperform larger companies in the first quarter most years, subsequently reversing this over the next two quarters. This year, the relative outperformance – defensiveness – has continued in the second quarter. In the quarter to 30 June 2010, the FTSE 100 Share Index fell by 12.6% with the FTSE AIM Index down 5.6%. For the year to date, large companies are down 7% and smaller companies up 2%. The Fund was down only 4.0% in the quarter and is flat for the year to date. Since the Fund changed it name and remit to invest in AIM companies in September 2004, the asset value is up 104% against a fall in the AIM Index of 23% and a rise of the FTSE 100 Share Index of 33%.
As noted in last quarter’s review, it is perhaps not surprising that the strong market rally of the last year has come to an end. The subsequent correction should be seen as healthy and simply takes markets back down closer to fair value. Although the threat of a double dip recession is still present, monetary easing is unlikely to be aggressively reversed and the market environment looks supportive.
Of the few transactions in the quarter, the acquisition of coal miner Oracle Coalfields was the most noteworthy, financed by the continuing profit taking in Norseman Gold.
Source: Lipper hindsight to 30.06.10
|
|
%
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|
AIM
|
88.8
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PLUS
|
4.1
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Unquoted
|
7.2
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