Fund Profile

Disclaimer

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.

Overview
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Overview

BlackRock Smaller Companies (BRSC) aims to grow capital over the long term by investing in a portfolio of UK listed smaller companies. The trust has an exceptional long-term track record relative to the benchmark, outperforming in each of the past ten calendar years, as we discuss further in the Performance section.

The manager, Roland Arnold, pays particular attention to growth companies which have the potential to become market leaders in their fields. As such, he favours companies towards the smaller end of the market cap spectrum. The portfolio is one of the most diversified in the UK Smaller Companies sector, with close to 130 stocks. The holdings come from a wide range of industries with diversified sources of revenue, and many of them have an international element to their revenues.

Over the past five years the trust has delivered NAV total returns of 42.7%, compared to 7.1% from the benchmark, and 28.1% and 23.8% respectively from the IA and AIC peer groups. Although the trust has been unable to generate positive returns in 2020, it has held up well in comparison to the rest of the sector. This has been aided by the high quality, growth focus of the underlying companies, as well as the well diversified approach to risk employed by Roland.

Although capital growth is the main focus, the trust also has a strong history of dividend growth. Currently yielding 2.5%, BRSC has grown its dividend at a rate of 21.1% over the past five years.

Currently (as at 07/05/20) the trust is trading at a discount of 1%.

Analyst's View

BRSC has an exceptional long-term record of outperformance relative to both the benchmark and peer groups. Roland became sole manager a year ago, having been co-manager since 2018; and although he has only been the sole manager for a year, little has changed in the trust’s approach to stock selection.

We believe BRSC’s diversified approach to single stock risk is particularly attractive in the current uncertain environment. The trust has dramatically outperformed its peers and the benchmark in falling markets over the past decade, and we attribute this in part to its sensible diversification among companies, sectors and economies. However, the trust still retains a focus on high growth companies, which has helped it outperform in many rising markets too. BRSC performed relatively strongly through the recent market downturn – triggered by the coronavirus pandemic – due to outperformance by its favoured growth stocks. Given its diversified blend of high quality growth companies, we think the trust could be in a good position irrespective of whether markets fall or rebound.

Due to its strong performance in both rising and falling markets, the trust is trading at discount of 1.0%.

bull bear
Excellent long-term performance in both rising and falling markets In bear markets high levels of gearing could drag on performance
Well diversified approach helps protect capital in the current uncertain conditions UK Smaller Companies continues to be one of the most out-of-favour sectors
Relatively low ongoing charges fee Highly diversified portfolios require more ideas to be successful
Continue to Portfolio

Fund History

12 May 2022 Going against the grain
Overzealous selling may provide opportunities for investors happy to take on the risk…
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 Five small cap trusts on very wide discounts
The UK Smaller Companies Sector is battered and bruised, 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…
13 May 2020 Braving the new world
Join 15 of the UK's best known fund managers at the Kepler Trust Intelligence Virtual Summit to find out how they see the world after the pandemic...
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…
04 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...
25 Oct 2017 Patience is a virtue…
We analyse the outperformance of UK small-caps and why it has been so important to take a long-term view...
05 Jul 2017 IPOs: Be selective
The small-cap team at BlackRock explains its strategy to investing in newly-listed companies and the risks surrounding them...
27 Jun 2017 What's driving frontier markets?
Can political and economic reforms make a difference when it comes to looking for growth?
15 Jun 2017 Signs of continental shift
BlackRock's Stefan Gries explains what's driving opportunities in Greater Europe...
12 Jun 2017 MAYDAY!
As the Conservative party founders, we examine the impact of last week’s disastrous election on trusts...
08 Jun 2017 The long game
Highlights from BlackRock Income & Growth's annual general meeting...
07 Jun 2017 Omnishambles...
Given the huge levels of political-induced uncertainty, we analyse recent drivers and themes within the UK equity market ahead of the upcoming election
05 Jun 2017 Emerging Opportunities
BlackRock's Chris Colunga discusses the advantages of emerging European countries...
25 May 2017 An opportunity in UK small-caps?
We round up recent recommendations, results and analysis of the latest developments in the UK small-cap sector...
04 May 2017 Size matters
We highlight the potential liquidity and capacity constraints that could hinder open-ended UK smaller companies funds...
29 Mar 2017 Good things come in small packages...
Mike Prentis, BlackRock’s portfolio manager for smaller companies, explains his rationale for picking companies...
15 Mar 2017 Never mind the ballots
Despite political uncertainty in Europe, the continent remains home to some of the world's strongest brands and companies...
10 Mar 2017 The long and short of it
BlackRock's Dan Whitestone explains how 'shorting' a company can make money for investors on a falling share price...
25 Jan 2017 Frontier markets can give you the edge…
Gordon Fraser, portfolio manager for frontier markets at BlackRock, highlights everything investors need to know about high growth frontier markets...
06 Jan 2017 Confidence returns to commodities
Tom Holl, co-manager of BlackRock’s Commodities Income Investment Trust, discusses the future for this diverse sector...
19 Dec 2016 Salvation for Latin America?
BlackRock’s portfolio manager for Latin America, Will Landers, assesses the region’s potential for growth....
26 Oct 2016 Fund Analysis
A UK focused trust which implements a bottom-up investment process targeting ‘high quality’ companies which offer strong growth potential.
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