Diverse Income Trust plc (LON:DIVI) has announced its Factsheet for the month ended 30 April 2024.
Manager Commentary
Although interest rates were expected to be cut a number of times during 2024, ongoing inflationary pressures have persisted, most particularly in the US. Funds that mirror a stock markets index have remained the prime beneficiaries, and larger company returns have been strong again. Meanwhile, small companies have missed out, in part due to ongoing redemptions of UK investments.
Yet over March and April market trends appear to have changed. With Chinese growth accelerating modestly, and the US economy remaining robust, commodity (such and oil and gas) and energy prices have recovered more than expected. Furthermore, there has been a decline in bond valuations as well. So, over the last couple of months high-profile US companies, such Meta Platforms, Tesla and Apple have seen their share prices decline, whilst the share prices in industry sectors such as energy, mining and
financials have outperformed.
Specifically, from the19th April onwards the FTSE 100 Index has risen well, breaking a low return trend that has been in place since 1999. If the UK’s recent breakout were to persist into the coming months, then we regard the new market trends may be something that could remain in place for quite some time. It is too early to be sure on this as yet.
Either way, UK small company share prices haven’t really recovered as yet. We are not worried, as it is usual for them to react after a modest time lag. If the share prices of the largest companies in the UK were to continue to rise, then we expect UK small companies are set for a period of performance catch up, given they suffered a much bigger setback in valuation than the larger companies in recent years.
Gervais Williams & Martin Turner
30.04.2024
Diverse Income Trust plc invests primarily in quoted or traded UK companies with a wide range of market capitalisations, but a long-term bias toward small and medium sized companies.
