(Clarifying net asset value and share performance compared to benchmark)

Brown Advisory US Smaller Cos PLC on Monday said net asset value increased in its latest six months, and noted the US economy’s ‘reasonably favourable’ outlook.

The investment trust, which backs small-cap companies in the US, said its NAV at December 31 was 1,459.2 pence, up 1.9% from 1,431.9p at June 30.

Across this period, Brown Advisory shares rose 5.9%. This underperformed the 7.8% gain reported by its benchmark, the sterling-adjusted Russell 2000 Total Return Index.

On Monday afternoon in London, shares in Brown Advisory US were up 1.0% at 1,318.00 pence.

Chair Stephen White explained that while the Russell 2000 ‘had its best December rally ever’, its gains ‘did not really benefit the company, given its limited exposure to lower quality, heavily indebted and speculative stocks’.

Regardless, he said Brown Advisory US was ‘pleased’ that the company’s NAV grew ‘during a period where smaller companies performed reasonably well despite the mega caps once again leading the advance’.

Going forward, he said US equity markets - which opened the year ‘on a more restrained note’ - have ‘good reasons for renewed caution in the short term’. Brown Advisory US believes various headwinds, including the ‘geopolitical situation [which] has, if anything, deteriorated’, could ‘lead to more uncertain and volatile markets in the short term’.

Nonetheless, White continued, ‘While geopolitical developments are difficult to forecast, the prospects for the US economy itself and its financial markets appear still reasonably favourable,’ White commented, ‘and we remain confident in the portfolio manager’s ability to identify strong opportunities and to deliver positive results for our shareholders over the long term.’

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