Smaller companies rose in August and outperformed mid caps and large caps. From a sector perspective, materials, telecommunications and
healthcare led whilst utilities, technology and industrials lagged. Macroeconomic data was mixed during the month, with data better than expected in the US and the UK but below consensus forecasts in Europe, Japan and emerging markets. Concerns grew about the independence of the Federal Reserve and after a dovish speech by Chairman Jerome Powell, the market looked forward to an interest-rate cut in September.
Government bond yields traded mostly in a range.
The Company’s net asset value (NAV) climbed 2.5% in August, outperforming the benchmark. The discount widened in the period.
In North America, our portfolio outperformed the local index. Owner of industrial properties Plymouth Industrial REIT received a takeover bid from
its joint-venture partner. Ensign Group, a provider of nursing and rehabilitative care services, made further progress with its acquisition strategy; consequently, earnings forecasts for the company rose. Standex International, which produces niche industrial components, reported good results and strong orders in its electronics division. On the negative side, engineering services company WSP Global announced lower-than-expected organic revenue growth and the shares slipped as a result. GrafTech International, a producer of graphite electrodes for the steel industry, suffered from low customer demand. After a strong run, shares of Curtiss-Wright, a manufacturer of aerospace, defence and power-related products, sold off as investors took profits.
The UK portfolio was behind its benchmark. Shares of Oxford BioMedica (a contract development and manufacturing organisation) rallied after the company announced new medium-term targets. Administrative services firm JTC was the subject of takeover interest. Optimism grew over a potential improvement in margins at payments platform WAG Payment Solutions. An adverse shift in its mix of business led to online-marketplace technology provider Auction Technology Group lowering its guidance for margins. Continued weakness in the housing market caused a broker to downgrade homebuilder Crest Nicholson. Concerns over potential changes to taxes on gambling weighed on the shares of casino operator Rank.
The European portfolio underperformed its benchmark in the month. Improved pricing, higher passenger numbers and new contract wins led to strong performance from Do & Co, a provider of airline catering services. Bank of Ireland shares rebounded following a favourable UK Supreme
Court judgement on industry-wide mis-selling of financing for vehicles. Insurer Storebrand benefitted from higher insurance rates and growth in the company’s asset management business. On the negative side, results disappointed at events and ticketing business CTS Eventim because of the slower-than-expected integration of a recent acquisition and weakness in the company’s live events division. In the engineering services sector, SPIE and Bilfinger both reported good results, but the shares subsequently sold off as investors took profits after a period of strong performance.
Returns in Japan were ahead of the MSCI Japan Small Cap index in the month. Marine equipment manufacturer Furuno Electric benefitted from a broker initiating coverage with a positive recommendation. Broadcaster Nippon Television Holdings reported good results with strong growth in advertising revenues. Optimism grew that price increases would lead to an acceleration in earnings growth at building products company Sanwa Holdings. On the negative side, heavy-machinery manufacturer IHI saw a slowdown in its resources, energy and environment division. Software developer NSD reported lower-than-expected monthly sales, and logistics services provider Mitsubishi Logistics suffered from sluggishness in the company’s US business.
In totality, the Rest of World fund holdings outperformed the MSCI Asia ex Japan small cap index during the month. Pleasingly, all four funds were
ahead of the local index in the month.
As at 31 August 2025
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