BlackRock Smaller Companies (BRSC)

BlackRock Smaller Companies (BRSC) is now the largest growth-focussed investment trust in the sizeable AIC UK Smaller Companies sector, following the combination with stablemate BlackRock Throgmorton (THRG). Despite this, continuing portfolio manager Roland Arnold’s investment approach remains the same, looking for high-quality companies at the lower end of the UK market-cap spectrum, with the goal of generating benchmark-beating returns through superior stock selection (see Portfolio).

Whilst capital returns are Roland’s primary focus, BRSC has an impressive Dividend track record, having grown it for 23 consecutive years. The dividend frequency has recently doubled to four per year, meaning a more regular payment schedule for shareholders, with consummate reserves in place to maintain the growth track record if required.

Following the completion of the transaction, BRSC now offers better liquidity, greater scale, and lower Charges. With the latter also aided by a reduction in management fees, BRSC is the cheapest fund without a performance fee in the peer group. Furthermore, there has been the introduction of a triennial tender offer and a five-for-one share split, all designed to improve the appeal of the trust to a wider pool of investors, with the aim of narrowing the current Discount.

The trust’s Gearing position remains strong. Roland has access to long-term facilities at highly competitive rates, which will enable him to increase exposure, should he identify bottom-up opportunities, which has been the case recently as market valuations remain subdued.