June 2009
Performance
The capital NAV of the Trust rose by 3.8% in May which was slightly ahead of the return from
the FTSE All-Share Index – the out-performance of the NAV was attributable to technical
factors arising from the Lloyds Banking Group open offer.
Following a very weak start to the year, UK equities have produced positive returns in each
of the last three months. Commodities maintained the momentum in May with the oil price
moving back above $60 per barrel and base metals continuing to post impressive gains.
Concerns over inflation and US dollar weakness also pushed the price of gold higher.
Standard & Poor’s revised down the UK’s credit outlook to negative from stable, citing concerns
on the rapidly deteriorating public finances. While the revision does not mean the UK will be
downgraded, it does bring the prospect a step closer and highlights that, after the next general
election, the government of the day will be faced with the unenviable task of significantly
reducing the size of the public debt.
The Bank of England took the bold move of expanding its quantitative easing programme
last month, announcing plans to inject an extra £50bn into the UK economy. This additional
measure was a surprise and implies that the Bank believes that the economy needs further
support to drag it out of recession. The FTSE 100 Index rose by 4.1%, while the FTSE 250 Index
fell by 0.4% and the FTSE SmallCap Index rose by 3.1%.
Activity
There were no changes to the constituents of the FTSE 350 Index in May.
Strategy
The Trust’s portfolio replicates in full the constituents and weightings of the FTSE 350 Index
and also holds most of the constituents of the FTSE SmallCap Index.
Source: Monthly Factsheet Aberdeen Asset Managers Limited