Nish Patel’s April Market Snapshot

Smaller companies underperformed larger companies in March. Global stock markets fell as conflict in the Middle East intensified with the outbreak of war in Iran. Damage was caused to the region’s energy infrastructure and the Strait of Hormuz (a key shipping lane for oil exports) was effectively closed. The resulting surge in oil and gas prices led to fears of a pickup in inflation and higher interest rates. In The US, UK and Europe investors had previously forecast interest rate cuts. Against this backdrop, yields on government bonds – a key barometer for long-term borrowing costs – rose. This was a headwind for equities as were fears that the conflict might dent economic growth and company profits. Indeed, March’s forward-looking surveys of economic activity suggested the likelihood of a slowdown in growth, particularly in Europe, with many respondents citing concerns about rising energy costs and supply-chain disruptions.

The Trust’s net asset value (NAV) and share price underperformed the benchmark in March. The discount to NAV widened in the month.

In North America, our portfolio lagged the local index. Positive contributors included tank barge operator and oilfield services provider Kirby; the company’s earnings outlook was boosted by higher oil prices and wider refinery crack spreads. Grand Canyon Education, which provides services to the higher education sector, saw its shares bounce following a period of weakness. United Bankshares was another positive contributor, it was supported by share repurchases. Negative contributors included Wheaton Precious Metals, which fell in tandem with the gold price. Apparel and footwear chain Boot Barn Holdings declined with the wider retail sector as economic uncertainty grew. GXO Logistics was hit by a broker downgrade.

The UK portfolio outperformed its benchmark. Positive contributors included Auction Technology Group, which was rumoured to be a takeover target. Legal services firm Knights Group confirmed that it was in discussions with potential acquirer Moore Barlowe. Shares of 1Spatial (a leader in geospatial data management) were supported in a weak market by the company’s takeover bid from VertiGIS. On the negative side, cell and gene therapy specialist OXB continued to drift lower after a failed acquisition attempt by EQT. Video games developer Everplay’s profit guidance implied a greater weighting towards the second half of the financial year, the shares consequently underperformed. Despite providing a solid trading update, homebuilder Crest Nicholson fell along with its peers as bond yields rose.

The European portfolio underperformed its benchmark. Positive contributors included GTT, a producer of membranes for LNG vessels, it benefitted from an acceleration in order growth. Brokers raised their earnings forecasts for Nordnet, an investment platform provider that serves the Nordic region. Norwegian insurer Storebrand’s defensive business model held up well in a weak market. Negative contributors included airline and events caterer Do & Co which was hit by concerns over a potential decline in airline traffic and passenger volumes in the aftermath of the war in Iran. Household appliance manufacturer De’Longhi suffered from tariff related costs and increased competition. Profits were taken in engineering services company SPIE.

The Japanese portfolio modestly trailed its benchmark. Positive contributors included Canon Marketing Japan which was lifted by the release of ambitious long-term targets at the company’s investor day. Modec, which designs, builds, and operates floating production systems for the offshore oil and gas industry, was boosted by higher oil prices. Real-estate company Tosei was supported by shareholder activism that sought to improve the company’s capital efficiency. On the negative side, Nishi-Nippon Financial declined with the wider banking sector. Amada fell because of concerns over the impact of wider economic uncertainty on demand for the company’s metal related machinery. Shares of marine equipment manufacturer Furuno Electric slipped on profit taking.

In totality, the Rest of World fund holdings outperformed the MSCI AC Asia ex Japan Small Cap index. This was driven by the outperformance of the Schroders Global Emerging Markets Smaller Companies fund, Utilico Emerging Markets Investment Trust and Templeton Asian Smaller Companies fund. On the negative side, the Scottish Oriental Smaller Companies Investment Trust underperformed.

As at 31 March 2026