The likes of Rio Tinto, BHP Billiton and Glencore have all cut dividends this year, a further sign of tough times in the commodities space, while Barclays and Standard Chartered have disappointed investors in financials (see chart, source AJ Bell).
As the AIC made clear earlier this month, there remain a fair few investment trusts that have increased their dividends consistently for the past two decades, but another alternative to open-ended giants from Woodford, Artemis, Invesco Perpetual et al is those favouring smaller UK-centric businesses.
That is not to say small-cap funds have necessarily delivered in recent months, though for David Taylor, co-manager of the PFS Chelverton UK Equity Income Fund, 2016 will prove to be very similar to 2015 in being a “game of two halves” for investors.
Early last year investors worried about the UK general election before markets rallied in the second-half. This year, says Taylor, the “elephant in the room” is the EU referendum.
“What small and mid-cap share prices really don’t like is uncertainty. Whilst companies are actually trading quite well, and importantly dividends are coming in ahead of expectations in this arena, the reason that we are not really performing as well as perhaps we should is Brexit.”
“We think we could have a pretty similar year to last year which is we go through the referendum and people see there is little to actually worry about.”
