Edinburgh US tracker slides

The Edinburgh US tracker, the only UK investment trust to track the performance of the S&P500 index, outperformed over the six months to July its results showed today.

The trust posted an 8.8% fall in its net asset value compared with its benchmark, which fell 9.1%, while the company’s share price fell by 5.2% to 708.5p across the period.

The fund has been fairly passive in tracking the S&P index, although this slight outperformance should be as much a concern as underperformance since trackers are not designed to beat the index and only do so through imperfect tracking.

The trust's chairman Angus Grossart said: ‘The level of activity in the portfolio was relatively low and this reflected the changes to the constituents of the index. The level of takeovers and mergers in the US stockmarket has fallen sharply in the last 12 months and this has resulted in fewer changes to the constituents of the index.’

He pointed out equity prices in the US have been squeezed by a number of high profile profits warnings, and investor sentiment would remain cautious until there is clear evidence the country’s economy has started to recover.

Alan Ray, investment trust analyst at Credit Lyonnais Securities, told Citywire the trust could still be cheaper than unit trusts, if all charges and discounts were taken into consideration, but the question for investors was whether they wanted to invest in the US ‘with equity markets in the state they are in.’

The trust currently trades at 2% premium to NAV compared with an average discount of 2% over the last 12 months. The shares are down 1.5p today to 653p.