In turbulent markets, like at present, some areas such as smaller companies are hit particularly hard. Odyssean Investment Trust (OIT) invests in smaller companies and is highly concentrated – it only had 19 holdings at the end of March and the 10 largest accounted for over 70 per cent of its assets. This should be a recipe for volatility, but it has fallen less than UK smaller companies indices over the past year and – surprisingly – the FTSE All-Share index, which includes larger and more stable companies.
Stuart Widdowson, co-manager of Odyssean Investment Trust, attributes this to a number of factors. “We’ve always run the trust with a conservative balance sheet [whereas] many investment trusts in the sector are geared and that exacerbates volatility,” he explains.
Odyssean Investment Trust has no gearing – debt – and has run a fairly high cash position so far this year, with 10 per cent of its assets in this at the end of March, and at times even more due to holdings being acquired.