Henderson Smaller Companies has been relegated from the FTSE 250 index to the FTSE Small Cap index a...
Henderson Smaller Companies has been relegated from the FTSE 250 index to the FTSE Small Cap index after seeing its net asset value fall by more than half over the last 12 months.
The demotion comes in the latest quarterly review of both indices by index provider FTSE but the changes will not come into force until Monday 18 March.
Paul Locke, analyst at HSBC, said the trust's demotion should not be seen as a surprise, given its geared exposure to the technology sector and the falls that markets have suffered during the past 12 months. He said pure IT stocks still comprise 35% of the portfolio, with exposure to the wider TMT sector exceeding 60%.
Over one year to 27 February, the £330.9m trust, managed by John Alexander, is ranked 33 out of 35 in the UK smaller companies sector, returning -51.8%, compared to the sector average -21.7%. Over three years it is ranked bottom in the sector, returning -37.2%, compared to the sector average 42.5%.
According to Locke, the trust could face further pressure on its already relatively wide discount, which currently stands at -21.2%, given the impact of such index changes on the buy/sell operations of tracker funds.
This, he said, was notable following the deletion from the FTSE 250, and exclusion from all indices, of the Second Alliance Trust on liquidity grounds in December last year.
The British Portfolio Trust, a generalist UK trust launched by Dresdner late last year and managed by Neil Dwane, will have to wait until the December review of the FTSE Fledgling index before it can be admitted to the index. Both it and the Premier Recovery Trust have to pass the FTSE's liquidity screens.
As of 31 January 2002, the portfolio had some 51.4% in services, 35% in IT, 7% in consumer goods and 2.9% in financials, with 2.1% in basic industries, 0.4% in cash and bonds and 1.2% in other investments.
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