August 2008
Performance
The Trust outperformed over the month with the net asset value per share declining by 3.7%
compared to the FTSE Small Cap (exIC) which declined by 4.5%.
Equity markets declined further in July. Investor risk aversion remains at high levels and in such
an environment smaller company shares continued to underperform their larger counterparts.
The Trust benefited from good performances from Detica which announced it had received an
approach from British Aerospace. McBride, which bounced following weakness in May and June
and Ultra Electronics who continued their track record of announcing successful contract wins.
Detractors from performance included Morgan Sindall which announced that they were having
to write down certain contracts they had acquired from Amec. Laird announced interim results
that were weaker than the market was expecting, and Ennstone issued a profits warning as a
result of weakening demand in both the UK and US.
Activity
Having held up well the holdings in: Dechra Pharmaceuticals, Chloride Group and Aveva were all
top sliced. The proceeds were re invested into: Numis, Mothercare, Morgan Sindall, CareUK and
John Menzies.
Outlook
Macroeconomic data remains volatile with large swings from month to month as characterised
by the latest retail sales data. However the underlying trend is worsening with inflation rising
and showing no signs of abating; increasing pressure is being placed on both consumer and
corporate profitability. July has witnessed declines in the oil and some other commodity
prices and if this continues it should ultimately feed through to lower inflation. However
the Monetary Policy Committee remains unwilling to reduce interest rates in the meantime.
House prices are declining and arguably the rate of decline is accelerating. The September
reporting season will be crucial to setting the level of market expectations for the coming
months. We will retain our focus on good quality companies with sound balance sheets and
sustainable cash flows.
Source: Monthly Factsheet Aberdeen Asset Managers Limited