BlackRock Smaller Companies (BRSC)

BlackRock Smaller Companies (BRSC) owns a portfolio of high-quality stocks from the lower end of the market-cap spectrum that can offer long-term growth opportunities for investors. Manager Roland Arnold utilises a tried and tested process, focussed on bottom-up stock selection to take advantage of the lack of research in this market sector.

Roland has identified companies with consumer exposure as some of the best opportunities in the market, including those in the housing sector supply chain. He highlights resilient household incomes and savings rates as the reason behind this. The Portfolio also has exposure to a number of high-end industrial firms as a result of bottom-up stock selection. As a result of high takeover activity and a relatively low number of IPOs, the portfolio concentration has ticked up, with the portfolio now toward the lower end of its holding range at c. 100 names.

The trust continues to have relatively high levels of Gearing, although this has been eased back in the past few months. The trust has a very competitively priced facility, with a weighted average cost of just 2.6%, fixed for the very long term.

Whilst the primary goal has been capital growth, BRSC also has a highly competitive Dividend track record, with 21 years of continuous increases, leading to it achieving the AIC’s Dividend Hero status. The current yield is c. 3.8%, slightly above the 3.4% yield for the wider FTSE All-Share Index.