Fund Profile

BlackRock Smaller Companies 05 April 2022


This is a non-independent marketing communication commissioned by BlackRock. 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 deliver long term capital growth to shareholders by investing in high quality UK smaller companies with superior growth prospects. Managed by Roland Arnold since 2018, BRSC is part of a suite of strategies run by the five strong Emerging Companies team at BlackRock.

As discussed in the Portfolio section, Roland invests across the market capitalisation spectrum, from AIM listed companies with market caps of c. £100m to mid-caps up to £2bn market cap looking for best in class companies with the potential for sustained, compounding earnings growth. The focus on high quality, cash generative companies has had the pleasant side effect of driving strong dividend growth. As noted in the Dividend section, the payout of the trust has grown by c. 14% p.a. over the last five years.

Structural Gearing and exposure to the smaller end of the market cap spectrum has resulted in BRSC exhibiting higher volatility than the benchmark however, as discussed in the Performance section, investors have to date been amply rewarded for this higher risk with consistent absolute and risk-adjusted outperformance versus peers and benchmark over both the long and short term. The consistency of excess returns has been achieved by building a balanced, diversified portfolio of c. 120 stocks such that relative returns are driven by stock-picking decisions rather than out-sized bets on sector or style.

BRSC is cost effective versus peers (see the Charges section) and is, at the time of writing, trading at a relatively wide Discount versus its own history (c. 12.4% as at the time of writing versus one year average of 5.5%).

Analyst's View

BRSC is the second largest trust by size in the AIC UK Smaller Companies peer group, with total assets just over £1bn at the time of writing. Its success is built on a long-term track record of consistent outperformance versus peers and benchmark, relatively low costs, a readily understandable and clear investment approach, and strong dividend growth.

A number of factors have helped Roland deliver strong returns, including active stock-picking in a sector with low analyst coverage, the inherent high earnings growth potential of smaller companies and BRSC’s access to low-cost gearing. Given these advantages, Roland takes the position that it is not necessary to take out-sized bets on styles and sectors to boost returns, dampening down the effects of market swings between value and growth via portfolio construction. Our view is that this is a sensible approach given the trust is already a ‘high beta’ strategy given the exposure to the smaller end of the market cap spectrum and the use of gearing which makes BRSC more volatile than the benchmark.

At the time of writing, the war in Ukraine and inflationary pressures are very much to the forefront of investors’ minds, but for those with a long time horizon the valuation multiple compression that has occurred year to date coupled with the current discount level of BRSC could provide an attractive entry point. Additionally, if there are tough times ahead for the UK economy, being positioned in high quality companies most likely to survive is a relatively attractive place to protect capital in the long term.


  • Strong, consistent long term track record of outperformance and dividend growth
  • Current discount wide versus recent history
  • Significantly lower OCF than peer group average


  • Structural gearing can exacerbate downside, as well as upside
  • Higher beta fund, tends to underperform in volatile markets
  • Small-cap market segment vulnerable to sell-off in liquidity crunch
Continue to Portfolio

Fund History

11 Jun 2024 Catching the wave
Why the early bird investors in the UK small-cap sector have historically been well-rewarded…
07 Jun 2024 Investing in UK small-caps with investment trusts
Investment trusts provide a simple way for investors to add exposure to the high-growth UK small-cap sector…
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...
20 Mar 2024 Don’t stop believing
Why the UK small-cap sector is ready to shake off its shackles after a tough few years…
09 Feb 2024 Protecting against the unknown
Accepting that prediction making is flawed makes life easier for investors…
16 Nov 2023 BlackRock Smaller Companies - Bull vs Bear
In this inaugural episode of Bull vs Bear, we look at BlackRock Smaller Companies (BRSC)...
03 Nov 2023 We already know
A gloomy outlook for the UK economy is hardly novel information…
27 Oct 2023 What else?
Some trusts still offer attractive return potential, without the high valuations the US offers...
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...
30 Mar 2023 Going against the grain
BRSC’s discount and recent performance could mean there’s room for cautious optimism…
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…
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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