A stock market buffeted by external factors is a common occurrence, but it often gives rise to opportunities to acquire shares on very attractive valuations. This time round, the concerns have centred on the possibilities of a ‘double-dip’ recession on the one hand and a full-blown, eurozone-inspired banking crisis on the other.

So far as recession is concerned, while the authorities in the UK at least have shown some initiative in restarting the quantitative easing programme to try and stimulate economic activity, there are some doubts as to the likely effectiveness of this policy. Sharply negative real interest rates have had little effect over the past couple of years, such is the drag from high levels of consumer debt and a largely stagnant property market. Several years of sluggish growth look the best that can be expected.

In the eurozone, incompetence and delay have been the order of the day. Even in the wake of the collapse of Dexia, moves to recapitalise the weaker parts of the banking system in the eurozone are said to be a couple of weeks away. The market has been kinder than it might have been to the politicians and taken this lax timescale in its stride for the moment.

Yet there are pockets of optimism. In the US, for example, there are signs of improving job creation and a marked increase in transactions in the housing market, with some of the overhang of distressed properties removed at bargain prices.

It is frequently the case that the US leads the rest of the developed world out of recession, and this may be what happens on this occasion. Here again, though, there is the debt overhang to deal with. Recoveries from debt-induced economic contractions tend to operate on a different set of rules to conventional business cycles.

I am, however, taking my cue from what seems to be early signs of improvement in the US and looking to tilt the Share Spotlight portfolio in a slightly different direction. Throughout the past year to 18 months, the best performing investment trusts have been, respectively, global smaller companies and Japanese smaller companies. My thought now is that it could be the time for US smaller companies to move into the limelight, if I am right in thinking that there is a nascent improvement in the US economy.

My plan is to go for a solidly managed investment trust standing at a decent discount to its net asset value and invested in smaller companies that will benefit from US recovery. The first, however, is to raise funds to finance this move, which I am going to do by selling our holding in Stanley Gibbons.

The shares in the stamp dealer are still showing a profit, but effectively we held on to them too long and should have taken the opportunity to exit when they hit 200p some time ago. However, that’s easy to say with hindsight. I am selling our holding of 2,500 shares at the current price of 174p. After dealing costs this leaves the portfolio’s cash at just short of £5,200.

The trust I have picked to reinvest in is JP Morgan US Smaller Companies Investment Trust. This is managed by Glenn Gawronski and Don San Jose, and currently sells at around a 12 per cent discount to assets. It has, despite the ups and downs in the market, held its capital value intact over the past five years. Its portfolio is heavily focused on consumer discretionary stocks, financial services, healthcare and durable goods.

At a price of 785p, 500 shares cost just short of £4,000 allowing for stamp and commission, leaving the portfolio’s cash balances at £1,215. This move restores a bit of balance to a portfolio hitherto largely comprised of higher yielding UK small to medium sized companies, along with large utilities and income shares.

The FE risk rating for the JP Morgan trust, which looks at trends in relative volatility (with the most recent price movements given the heaviest weighting), suggests that the trust’s risk level is close to the average for the market.

The market and the portfolio have ended the period more or less level pegging since inception, each up by about 33 per cent, and consequently also not much changed on the last time we reviewed the Share Spotlight portfolio. Once again there has been a lot of volatility, due mainly to the continuing concerns over the Eurozone debt dbacle, which risks developing into a full-blown banking crisis without decisive action from European governments.

The portfolio’s gain over the period has been both helped and hindered by income effects. Cineworld, HSBC and Stanley Gibbons all paid dividends in the past month and together these payments have added £195.68 to our cash balances.

SSE, as it is now to be known following a name change from Scottish & Southern Energy, also paid a dividend during this period, but since we purchased the shares for the portfolio in early August, after they had been declared ex-dividend, the portfolio did not qualify for the payment.

Similarly, Hansard Global, which reported good results, is now trading ex-dividend. This sizeable 8p per share payment will not pop into shareholders’ bank accounts until mid-November but, as happens in the market, the shares have already adjusted downwards to reflect the fact that it is on the horizon. If we had been able to credit this dividend this time round, or if the shares had not gone ‘ex-dividend’ so soon, the portfolio’s performance would have been a whole percentage point better than it was in the event.

These temporary anomalies arise because ‘ex-dividend’ dates are fixed by reference to the so-called ‘record date’, the last date by which shareholders can qualify for that particular dividend. Sometimes the record date and dividend payment date are some weeks apart, as they are in this case.

Of the portfolio’s other constituents, Vodafone and SSE were the best performers, rising 6 per cent and 5 per cent since the last review, while HSBC and Cineworld both tracked the market.

The Share Spotlight portfolio can be accessed here.