BlackRock Smaller Companies (BRSC) aims to grow capital over the long term through a portfolio of UK listed smaller companies. The trust has a strong long-term track record of outperformance, not only against its benchmark but also its open- and closed-ended peers in the UK Smaller Companies sector.
After more than 16 years at the helm of the portfolio, Mike Prentis made the decision to step down in June 2019, leaving co-manager Roland Arnold to take over the reins. Despite this, little has changed in the firm’s bottom-up investment process, and its core focus of finding growth companies with potential to become much larger. Since Roland has taken over, BRSC’s impressive track record has only continued, with the trust delivering strong returns in 2019.
The portfolio is one of the most diversified in the sector, with close to 130 stocks. The companies come from a wide range of sectors with diversified sources of revenue, and many of the holdings having an international element to these revenues.
Currently (as at 12/12/19) the trust is trading at a premium of 0.8%.
Since Mike’s departure, little has changed at BlackRock Smaller Companies in terms of investment process. The company continues to look for high-growth opportunities through a clear and repeatable bottom-up process. Mike’s replacement, Roland Arnold, has continued to seamlessly deliver returns for investors and 2019 has seen the trust outperform both the benchmark (-2.2%) and AIC peer group (0.3%) by posting a gain of close to 7%. Looking at NAV TR performance over three years, the trust sits in the top five strongest performing trusts in the sector, and has the second highest Sharpe ratio (1.80), second to only BlackRock Throgmorton.
The portfolio is well positioned for uncertain conditions, with over 130 holdings diversified across a wide range of sectors. Despite this broad diversification, returns have been punchy and, as a result, the discount has narrowed dramatically in recent times and the stock now trades at a premium of 0.8%.
|Exposure to an asset class that has historically outperformed large companies by around 4% per annum (1955-2019)
||Vulnerable to any uncertainty affecting sentiment toward the UK
|Strong long-term track record
|Well diversified by sector and geography in the face of volatile conditions
|Relatively low ongoing charges fee