The Global Smaller Companies Trust Market Snapshot – April 2025

In March, shares in smaller companies in most regions fell in sterling terms, with the exception of Latin America. Economic data was mixed, with indicators generally surpassing expectations in North America and emerging markets and disappointing in the UK, Europe and Japan. The leading sectors were energy, utilities and consumer staples. The underperforming sectors were technology, consumer discretionary and industrials. Investors became more cautious. Investor concerns grew over trade policy in the US and a potential slowdown in growth in the country. This dampened confidence among US consumers and businesses. Investor confidence was further affected by uncertainty around US government policy, which prioritizes long-term goals despite potential short-term economic impacts. In Europe, Germany loosened its fiscal policy in order to increase its spending on defence and infrastructure. Inflation remained above central bank targets in major markets. The dollar fell and bond yields outside of the US rose over the month, while gold continued its recent winning streak.

The Company’s Net Asset Value (NAV) fell 4.7% in March, with the discount widening slightly over the month. That said, the movement in the Company’s NAV and share price were ahead of the benchmark.

In North America, our portfolio outperformed the local index. Precious metals streaming company Wheaton Precious Metals rose with the gold price. Insurance broker Brown and Brown continued to execute on its acquisition strategy and in a weak market benefitted from its resilient earnings profile. Managed care company Molina Healthcare received a broker upgrade. On the negative side, appliance manufacturer SharkNinja was caught up in wider concerns over tariffs. Helicopter transportation
specialist Bristow Group fell early in the month with the oil price. Jefferies Financial Group, the investment bank, posted results that showed a slowdown in capital markets activity because of economic and geopolitical uncertainty.

The UK portfolio was behind its benchmark in March. Video game developer Everplay delivered strong results, with good growth in its back catalogue and a positive outlook for new launches. Printing technology business Xaar released a promising new product that serves the Chinese battery, jewellery and apparel markets. IT services company FD Technologies delivered good results, with the company reporting strong sales growth. Frustratingly, shares of research business YouGov were subject to technical selling pressure; the company’s earnings and guidance were in line with expectations. Electronic component manufacturer XP Power underperformed as potential tariffs increased uncertainty over the expected recovery in the global semiconductor market. Shipping broker Clarkson delivered a strong set of results, but its outlook is less certain given the changing backdrop for global trade.

The European portfolio was also behind its benchmark during the month. RENK Group, an Austrian manufacturer of drive systems for military vehicles, benefited from continuing investor interest in European defence stocks. Higher insurance rates led to good results from Norwegian insurer Storebrand. Investors warmed to the new capital allocation strategy that was announced by French commercial services company Elis. In the aftermath of DeepSeek, semiconductor capital equipment producer ASM International continued to suffer along with the wider technology sector. The annual earnings forecast from events and ticketing business CTS Eventim was below investor expectations. Specialty chemicals distributor IMCD suffered from a broker downgrade and general concerns over global growth.

Returns in Japan were ahead of the MSCI Japan Small Cap index in the month. Positive contributors included Nippon Television Holdings, which raised its earnings forecast because of investment gains and higher advertising revenues. Bank stocks performed well over the month and this included our holding in Nishi-Nippon Financial. Diversified industrial IHI rose
with other defence-related companies amid expectations of budget increases by governments. On the negative side, profits were taken in real estate related companies including building products manufacturer Sanwa and real estate developer Tosei. Toy and game manufacturer Tomy saw selling pressure as the company reported lower-than-expected sales.

In aggregate, the Rest of World fund holdings outperformed the MSCI Asia ex Japan small cap index during the month. The Utilico Emerging Markets and Scottish Oriental Smaller Companies investment trusts, and the Schroders Global Emerging Markets Smaller Companies fund all delivered good relative performance. The Pinebridge Asia ex Japan Smaller Companies fund was behind the local benchmark.