Neil Hermon, Fund manager of The Henderson Smaller Companies Investment Trust, updates investors on progress in 2012, how the Trust is positioned and his outlook for the coming months.
Value of Investment
The value of investments and the income from them may go down as well as up and you may not get back your original investment.
Past performance is not a guide to future performance.
P/E is the price earnings ratio.
The price-earnings ratio is sometimes referred to as the "multiple", because it shows how much investors are willing to pay per pound of earnings. If a company were currently trading at a multiple (P/E) of 20, the interpretation is that an investor is willing to pay £20 for £1 of current earnings.
M&A is a general term used to refer to the consolidation of companies and stands for Mergers & Acquisitions. A merger is a combination of two companies to form a new company, while an acquisition is the purchase of one company by another in which no new company is formed. Higher M&A indicates this has been happening more frequently.
Bottom up approach
An investment approach that de-emphasizes the significance of economic and market cycles. This approach focuses on the analysis of individual stocks. In bottom-up investing, therefore, the investor focuses their attention on a specific company rather than on the industry in which that company operates or on the economy as a whole.
Long overseas, Long industrials, short consumer
A long position is held when the investor believes the value of an asset will rise. A short position is held when it is believed it will fall.