31 July 2007
ALLIANCE TRUST
MARKET VIEW – DESPITE STRONG RUN, STILL STOCKPICKING OPPORTUNITIES IN UK SMALL
CAP
- Smaller companies benefiting from
exposure to firm UK economy
- Engineers and service sector
strong on infrastructure investment
Even though smaller companies have
outperformed large cap companies in the UK in recent years, there are still
stockpicking opportunities in the small cap sector. In its Market View on Small
Cap, Alliance Trust says smaller companies are benefiting from an encouraging
UK economy and from trends such as increasing infrastructure spending, which particularly
benefits sectors such as engineers and PFI operators.
Investment Manager John Ewart said,
“While recognising the excellent returns from the small cap universe in recent
years and that these have made it harder to find value, we remain confident
that stock specific opportunities can still be found. Prospects for the oil
services sector remain encouraging, while high levels of capital spending on
infrastructure both in the UK and abroad are supporting various sectors. In the
UK, public and private infrastructure spending has been strong and we expect
this to continue supported by a sustained focus on regeneration and large
projects, like the Olympics 2012.”
Ewart said that the strong run for
smaller companies has made it harder to find value. The FTSE 250 index has
outperformed the FTSE 100 index by 110% in total return terms since March 2003.
(as at 28 June 2007). Alliance Trust’s small cap portfolio includes companies
from the FTSE-250 index and below.
Ewart said, “Smaller companies have benefited
from having a generally larger exposure to the UK economy than the largest
UK-listed companies. The biggest risk to the small cap sector is that economic
growth falls below current expectations. Another potential hazard in the UK is
that the threat of inflation pushes interest rates even higher.”
- The full Market View on UK Small Cap
is available on www.alliancetrust.co.uk
- ends -
Contacts
Email alliancetrust@lansons.com |
Notes to Editors
1. Alliance
Trust PLC has been investing since 1888 and is the largest generalist UK
investment trust by assets listed on the London Stock Exchange. It manages
nearly £3bn of assets (as at 30 June 2007).
2. Photographs of John Ewart are
available.