Another notable trust in the sector, whose track record is not fully reflected in its discount/premium rating, is Strategic Equity Capital. The portfolio is on a 8.7 per cent discount but its share price has achieved a 52 per cent rise in the past 12 months.
Stephen Peters, investment analyst at Charles Stanley, says: “Strategic Equity Capital is a truly small-cap fund that is also has a very activist style, but it can be quite illiquid.” While the best performing trusts in the past few years have been those with a growth strategy such as BlackRock Smaller Companies and the Standard Life trust, Mr Peters notes that he has seen a rotation of growth into value in the past 18 months or so.
He says: “It seems more and more investment trust managers have shown a willingness to invest in companies where perhaps the earnings growth has yet to be priced in, and where there is a willingness to take on a little more risk.
“We like BlackRock Smaller Companies and Aberforth Smaller Companies, two of the biggest and most liquid in the sector, and dividends and dividend growth are very important to the latter. But the Smaller Companies sector looks expensive overall, compared to where it has been over the past year.”
INVESTMENT TRUSTS
THE PICKS
Standard Life UK Smaller Companies investment trust
Managed by Harry Nimmo, the trust is currently trading at a premium of 0.5 per cent, after its share price rallied by some 33 per cent in the past 12 months.
BlackRock Smaller Companies investment trust
This is still trading at a discount of a lower than average 6 per cent in spite of rallying 53 per cent in the past 12 months.
JPMorgan Smaller Companies Investment Trust
This has jumped by 56 per cent in 12 months and is trading on a discount of just more than 14 per cent.
Henderson Smaller Companies Investment Trust
This is up by 53 per cent is on a 12.6 per cent discount.
