Henderson Smaller Companies (HSL)

Henderson Smaller Companies (HSL) aims to own UK smaller companies with strong growth potential but that are underappreciated by the market. This approach has enabled the trust to build a strong long-term track record, with HSL having significantly outperformed the benchmark since its launch in October 2002. In September 2025, Indri van Hien, who has been involved in the Management of the strategy since 2013, assumed sole responsibility as manager of the trust, following the retirement of long-standing manager Neil Hermon. She was joined by deputy fund manager Cassie Herlihy in November 2025, who also brings significant experience in the UK small-cap space.

Although Indri has retained the underlying investment philosophy, she has made her mark by introducing some refinements aimed at addressing the headwinds the strategy has faced since 2022. This has notably included reducing the number of holdings from over 100 companies to a range of 70 to 80. As such, Portfolio turnover has been higher than usual over the past 12 months, although it is worth noting that this reflects a period of adjustment and turnover is expected to return to its normal level going forward. Activity has included the sale of stocks where the investment thesis had deteriorated, such as rail ticketing platform Trainline, which is facing pressure from the upcoming launch of a government-backed ticketing app. At the same time, Indri and Cassie have built new positions across different sectors and industries, reflecting their deliberate approach to diversification, rather than allowing diversification to be a byproduct of individual stock selection. New purchases since the start of the year have included, among others, Saga, a specialist provider of products and services for people aged over 50, and Chesnara, a life assurance and pension provider.

In FY 2026, HSL paid a total Dividend of 29p, resulting in a 3.0% historic yield. This also marked the trust’s 23rd consecutive year of dividend growth, the joint longest track record in the AIC UK Smaller Companies sector, further cementing its AIC Dividend Hero status. We also note that HSL is part of the ‘AIC Millionaires’ group: meaning an investor who had put their full annual ISA allowance into the trust every year between April 1999 and January 2026 and held throughout, would now have a pot worth more than £1m, according to AIC calculations.