Shares - Smithson smashes benchmark as NAV jumps 15%

Global smaller companies investment trust Smithson (SSON) smashed its benchmark in the first half of this year, outperforming  by a wide margin despite market turmoil due to the coronavirus pandemic.

In its financial report for the six months to 30 June, the trust says its net asset value (NAV) per share total return was +15.3% compared to a 4.7% decline in the benchmark MSCI World Small- and Mid-Cap (SMID) Index, while the share price total return for the period was +13.3%.

Since its IPO in October 2018, the fledgling trust set up by star fund manager Terry Smith has delivered a NAV per share total return of 44.8%, compared to just a 6.6% gain for the benchmark over the same period.

This represents an annualised growth rate of 24.3% compared with 3.8% for the benchmark.

NAV INCREASE ‘VERY UNUSUAL’

Investment manager Simon Barnard said the significant NAV increase was ‘very unusual’ in a period when stock markets fell, and added ‘we don't expect to be reporting such an outcome often, but needless to say we are satisfied with the recent performance.’

The top three main drivers of performance over the period were healthcare stocks, which have benefited from the coronavirus pandemic with demand for their products soaring.

Medical technology companies Ambu and Masimo contributed 2.8% and 2.5% respectively to the trust’s strong performance, with respiratory equipment maker Fisher & Paykel adding another 1.5%.

DEMAND SOARS AMID PANDEMIC

Top performer Ambu makes disposable endoscopes, including bronchoscopes used for assessing coronavirus patients. The company saw demand for its scopes increase 72% in its last reported earnings, partly because the disposable nature of its products means there’s no risk of infection for subsequent patients.

Fellow medtech firm Masimo, which produces sensors to measure the vital signs of patients, also saw a surge in demand for its products, which are most often used in intensive care wards.

As for Fisher & Paykel, Barnard said that such was the demand for their products, management had to delay the company’s full year results by a month because many of their financial controllers, who would normally be working on the reports, were instead ‘assisting with customer enquiries, getting product into the hands of customers and providing operational support.’

Other contributors to performance included fast food retailer Domino’s Pizza Enterprises in Australia and index provider MSCI in the US, while detractors included American software firm Sabre and UK property market portal Rightmove (RMV).

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