Aberforth Smaller beats benchmark but cautious on US-Iran discussions
Aberforth Smaller Cos Trust PLC on Tuesday said that it is difficult to have full confidence in peace negotiations between the US and Iran, while reporting that it has outperformed its benchmark in the first half.
The investor in UK smaller companies said net asset value per share rose 3.0% to 1,797.29 pence as at June 30, from 1,745.26p at December 31.
NAV total return for the first half of 2026 stood at plus 5.5%, easily beating its benchmark, the Deutsche Numis smaller companies index excluding investment companies, which had a return of plus 1.8%.
However, Aberforth Smaller noted that larger companies were stronger, with the FTSE All-Share up by 7.2% in total return terms.
Aberforth Smaller declared a dividend of 15.30 pence per share, up 7.0% from 14.30p a year prior.
The firm said that US technology titans continued to announce "ever larger" capital expenditure plans as they aim to scale computing power to meet anticipated artificial intelligence demand.
However, it added: "Of course, most companies are not at the forefront of AI development. As the market focused on vulnerability to AI adoption more than on its efficiency benefits, many share prices came under pressure during the first half. Sectors such as software, estate agency, recruitment and insurance felt the effects.
"Exposure to these areas meant that AI was on balance a negative influence on the performance of the UK stockmarket's small and large companies during the first half of 2026."
Looking ahead, the company's managers Aberforth Partners LLP said: "Despite the oil price having declined sharply from its early April peak, it is difficult to have full confidence in the peace negotiations between the US and Iran. As long as peace does hold, pressure on economies and markets should ease. However, some damage will likely prove to have been done as the oil price spike feeds through to inflation rates and to monetary policy.
"For the UK, this means that interest rate cuts, which were widely expected before the onset of the Iran war, are now unlikely. Indeed, unchanged interest rates in 2026 would be a good outcome for near term economic activity."
They added: "The other main issue confronting the UK economy is domestic politics. Successive governments have implemented policies that have squeezed the private sector and undermined the UK's competitiveness. Policies on energy, land and labour have hampered economic growth and contributed to a higher cost of capital for companies, households and the government itself. This state of affairs influences today's remarkable combination of very strong private sector balance sheets and extremely depressed confidence.
"This combination points to the potential release of pent-up activity when economic conditions stabilise and politics turns more supportive of the private sector."
Aberforth Smaller shares were 0.2% lower at 1,708.00 pence each on Tuesday afternoon in London.
Copyright 2026 Alliance News Ltd. All Rights Reserved.