UK Edition
Questor: keep buying BlackRock Smallers – it has now beaten the index for 15 straight years
In June last year we tipped the BlackRock Smaller Companies trust, partly on the basis of its excellent record of beating the index against which it measures its performance. We pointed out that the trust’s returns had exceeded those of its benchmark index for the previous 14 years, which one team of analysts called “a truly remarkable achievement”.
The portfolio has now outperformed for another year, prompting those analysts, from the indefatigable investment trust team at Canaccord Genuity, to admit to “running out of superlatives” about it.
“The company has now outperformed its benchmark for 15 consecutive years. This is an almost unparalleled achievement,” they said.
In the last financial year, the trust’s net asset value (NAV) per share grew by 22.8pc with dividends reinvested, comfortably ahead of the 11.1pc gain of the benchmark, a smaller companies index compiled by Numis, the broker. Our tip has produced a 20pc rise for readers in capital terms.
Longer-term performance is even more impressive: the trust’s NAV total return has grown by 19pc a year for 15 years, against 10.8pc a year for the benchmark.
“The power of compounding results in a 15-year NAV total return of 1,255pc against 364pc and 283pc for the benchmark and FTSE All Share respectively,” the broker added.
- Read Questor’s rules of investment before you follow our tips. twitter.com/DTquestor
Canaccord also pointed out that BlackRock Smallers had the best risk-adjusted returns, as measured by the “information ratio”, of any equity investment company over 10 years.
It highlighted the experience of the fund manager’s UK small and mid-cap team, saying “the considerable resources of BlackRock, including the risk team, and its network of contacts are a competitive advantage with which to exploit inefficiencies in an under-researched part of the market”.
The portfolio is highly diversified, with about 170 holdings.
The trust recently gained a new co-manager, Roland Arnold, to work alongside Mike Prentis. It has also scrapped its performance fee. The discount has narrowed slightly over the past year to 11.2pc, compared with 13.5pc at the time of our tip.
Questor says: buy
Ticker: BRSC
Share price at close: £14.30
Investment trust news
Tetragon Financial, tipped here in October last year, has introduced a sterling quotation for its London-listed shares. The new shares trade under the ticker symbol TFGS. Dividends will continue to be declared in US dollars but the company intends to make future dividends available in sterling for shareholders who request it.
Colin Hughes, co-manager of Henderson Opportunities, tipped here in March 2017, is to retire. James Henderson continues as the lead manager, assisted by Laura Foll and Charlotte Greville. Foll will become co-manager when she returns from maternity leave in September.
Ian Barrass, co-manager of Henderson Alternative Strategies, is to retire through ill health. James de Bunsen, co-manager since 2014, will continue in his role and Peter Webster will replace Barrass.
The board of Ranger Direct Lending has proposed the appointment of a new management firm, Ares, and has served 12 months’ notice on the existing manager. However, some shareholders oppose the new appointment and Numis said it expected the vote on the matter to be “close”.
Aberdeen New Thai has announced a number of changes designed to improve performance. It will increase exposure to smaller stocks, allow limited investments in unquoted firms about to list, charge more costs to capital rather than income, pay an interim dividend, starting in the third quarter, cut the annual management fee to 0.9pc from 1pc, and make more proactive use of “gearing” (borrowing).
Lazard World Trust Fund has changed its dividend policy. It will now pay a total of 6pc of its NAV at the start of the financial year in quarterly instalments. Previously it paid a total of 3.5pc in two instalments. Numis estimated this year’s quarterly payment at 5.7675p, with the first instalment due in August. That would make the yield 6.2pc at the current share price. A dividend of 6.4925p under the old policy will be paid on June 8.