Fund Profile

BlackRock Smaller Companies 27 December 2019


Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by BlackRock Smaller Companies. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

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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%.

Kepler View

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%.

bull bear
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

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Fund History

17 May 2024 BlackRock Smaller Companies Trust plc: A Look Ahead for 2024
Investors have been waiting for green shoots from UK smaller companies for much of the past two years. Rising interest rates, higher inflation and economic uncertainty have conspired to suppress any revival. The sector has been through the deepest and longest period of underperformance in over 40 years...
15 May 2024 Results analysis: BlackRock Smaller Companies
BRSC has outperformed the index in a challenging period…
30 Apr 2024 Fund Analysis
A focus on fundamentals may act as a catalyst for BRSC to bounce back…
29 Apr 2024 Investing in UK small-caps with BlackRock Smaller Companies - Podcast: Trust Issues #29
We discuss what BRSC offers investors looking for exposure to UK small-caps...
16 Nov 2023 BlackRock Smaller Companies - Bull vs Bear
In this inaugural episode of Bull vs Bear, we look at BlackRock Smaller Companies (BRSC)...
31 Jul 2023 Fund Analysis
BRSC is a newly minted ‘dividend hero’…
14 Jun 2023 Let's go round again?
Discounts have ballooned across the investment trust world, but our analysis shows we've been here before...
16 May 2023 Results analysis: BlackRock Smaller Companies
BRSC’s historically wide discount may offer an attractive entry point for long term investors…
05 May 2023 Don’t ignore smaller companies for income
While the UK market is a good hunting ground for income-seekers, that income is often concentrated in a handful of stocks and sectors. “A small cap allocation can help to diversify this, and the investment trust structure has unique features that makes it attractive to income seekers” says Roland Arnold on the BlackRock Smaller Companies Trust...
18 Jan 2023 Fortune favours the brave
Our research suggests a recession has already been priced into small cap trusts, but risks abound...
24 Nov 2022 Fund Analysis
BRSC’s wide discount and lower portfolio valuations may offer an attractive entry opportunity for long-term investors...
24 Nov 2022 Slides and Audio: BlackRock Smaller Companies
Download the presentation and listen to the audio from our webinar from 15 November...
02 Sep 2022 The small cap advantage
Smaller companies have shown their mettle through the pandemic. This is no accident, says Roland Arnold, portfolio manager of the BlackRock Smaller Companies Trust plc, these are dynamic and nimble businesses, that use capital effectively to drive innovation and deliver sustainable long-term growth...
10 Aug 2022 Get ‘em while they’re hot
Wide discounts in the UK Smaller Companies sector may present long term investors with good entry opportunities…
11 May 2022 Results analysis: BlackRock Smaller Companies
BRSC’s wide discount may provide an attractive entry point for investors…
05 Apr 2022 Fund Analysis
BRSC’s wide discount could prove a lucrative long-term entry point…
30 Dec 2021 Great expectations
As the last of the mince pies wilts in the fridge, topped with a generous helping of stilton, the Kepler Trust Intelligence team stick a finger in the air and point toward their top picks for the year ahead…
01 Dec 2021 Smaller companies: finding the best
Roland Arnold, Portfolio Manager of the BlackRock Smaller Companies Trust plc, explains how he uncovers companies that could grow their earnings for the long term.
29 Sep 2021 Fund Analysis
BRSC has a strong track record of consistent outperformance...
18 May 2021 Results analysis: BlackRock Smaller Companies
BRSC continues to forge a solid long-term track record despite a challenging year…
10 Feb 2021 Fund Analysis
BRSC has a strong track record of consistent outperformance...
10 Feb 2021 Eye of the Pfizer
Mining shares have rallied in recent months. With further potential, what impact could this have on the relative returns of active UK Small cap strategies...
17 Sep 2020 Blood in the streets
The UK Smaller Companies Sector faces plenty of challenges, but bombed out valuations among trusts in the sector look interesting...
05 Jun 2020 Deep impact
Audio and presentations from our conference this week, where fifteen of the world's best fund managers described a profoundly altered investment landscape...
22 May 2020 Fund Analysis
BRSC has one of the strongest track records in the UK Smaller Companies universe, consistently outperforming the benchmark in rising and falling markets…
06 May 2020 The fight in the dog
We look at the characteristics which have separated the winners from the losers among small-cap trusts in the current crisis, with some surprising results...
27 Dec 2019 Fund Analysis
BRSC is well positioned for uncertain conditions with strong diversification across sectors and geographies…
05 Dec 2019 Small wonders: income from the UK's most exciting companies
Smaller companies have typically been employed to add a little spice to a portfolio, to generate some growth alongside their stodgier blue-chip cousins. But they can play plenty of other roles, including as a solution for income.
12 Jun 2019 Fund Analysis
BlackRock Smaller Companies is a well-run company, with a long-term track record of strong performance...
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