However, according to research from the AIC, UK Smaller Companies trusts have not only shot the lights out in absolute terms, but the sector dominates the list of the most consistent trusts of the decade, with seven portfolios appearing in the top-20.
The AIC measures consistency versus all investment trusts – not only those in the IT UK Smaller Companies sector.
Among them are star UK smaller companies manager Harry Nimmo’s Standard Life UK Smaller Companies trust and Aberdeen’s four crown-rated Dunedin Smaller Companies IT.
Here, FE Trustnet takes a look at these trusts in more detail.
Dunedin Smaller Companies IT
Aberdeen’s four crown-rated Dunedin Smaller Companies IT is the most consistent UK Smaller Companies trust in the AIC’s top-20, outperforming the average investment trust in eight out of the last 10 calendar years.
The trust has also outperformed its benchmark – the FTSE Small Cap ex IT index – in seven out of the last 10 years, only lagging the index in 2003, 2007 and 2009.
It has returned 396.33 per cent over the last decade, making it the fifth best-performing smaller companies trust on the list.
Year-on-year performance of trust vs index over 10yrs
| Name | 2012 (%) | 2011 (%) | 2010 (%) | 2009 (%) | 2008 (%) | 2007 (%) | 2006 (%) | 2005 (%) | 2004 (%) | 2003 (%) |
|---|---|---|---|---|---|---|---|---|---|---|
| Dunedin Smaller Companies | 50.69 | -8.83 | 48.2 | 44.91 | -32.4 | -24.52 | 32.07 | 34.4 | 35.98 | 33.49 |
| FTSE Small Cap (ex IT) | 36.29 | -15.16 | 16.9 | 57.67 | -48.32 | -17.92 | 22.87 | 18.96 | 13.07 | 40.88 |
Source: FE Analytics
It has been managed by Ed Beal since December 2005. The manager is currently taking a strong view on industrial stocks, holding 40.6 per cent of his portfolio in the sector.
The trust is trading on a discount of 3 per cent and is 3 per cent geared. It has an attractive dividend yield of 2.6 per cent – the highest on this list.
Dunedin Smaller Companies has ongoing charges of 0.98 per cent, excluding performance fee.
Montanaro UK Smaller Companies IT
The second most consistent trust on the list is the little-known Montanaro UK Smaller Companies IT, which was taken over by managers David Lindley and George Cooke in July last year.
The five crown-rated trust has outperformed the average investment trust in eight out of the last 10 years and beaten the FTSE Small Cap index seven times.
Montanaro UK Smaller Companies has made 401.59 per cent for investors over the last decade; however, the impact of the new management team on performance remains to be seen.
Since Lindley and Cooke took over the trust, it has gained 29.91 per cent, compared with 33.63 per cent from the index, according to FE Analytics.
The trust is trading on a wide discount of 15.3 per cent, according to the AIC. It is only 1 per cent geared and is currently yielding 1.5 per cent.
Ongoing charges for the trust are 1.34 per cent, excluding performance fee.
Standard Life UK Smaller Companies IT
FE Alpha Manager Harry Nimmo's Standard Life UK Smaller Companies IT is the best-performing fund on the list in terms of total returns; our data shows it has returned 814.09 per cent over the last decade.
Performance of trust vs index over 10yrs
Source: FE Analytics
It has beaten the average investment trust in seven out of the last 10 years, and outperformed the Numis Smaller Companies ex IT index – its benchmark – seven times.
Nimmo runs many of the same winners from his four crown-rated Standard Life UK Smaller Companies fund – such as the online fashion retailer ASOS, which is the number-one holding in both vehicles.
His two highest sector weightings are services and industrials, at 29.9 per cent and 25.9 per cent respectively.
Nimmo’s trust is trading on a discount of 4 per cent, with 9 per cent gearing. It has a dividend yield of 1.2 per cent and comparatively low ongoing charges of 0.98 per cent.
Henderson Smaller Companies IT
The five crown-rated Henderson Smaller Companies IT has beaten the average investment trust in seven out of the last 10 years and outperformed the Numis Smaller Companies ex IT index in six of them.
Year-on-year performance of trust vs index over 10yrs
| Name | 2012 (%) | 2011 (%0 | 2010 (%) | 2009 (%) | 2008 (%) | 2007 (%) | 2006 (%) | 2005 (%) | 2004 (%) | 2003 (%) |
|---|---|---|---|---|---|---|---|---|---|---|
| Henderson Smaller Companies | 47.9 | -9.64 | 56 | 65.6 | -50.43 | -18.26 | 37.34 | 27.78 | 36.55 | 56.39 |
| Numis Smaller Companies ex Ics | 29.94 | -9.13 | 28.49 | 60.73 | -40.83 | -8.33 | 28.01 | 27.79 | 20.67 | 43.03 |
Source: FE Analytics
Over the last decade, it has made 466.16 per cent.
The trust, managed by Neil Hermon, is trading on the second highest discount of any on this list, at 16.6 per cent. It has 8 per cent gearing and a dividend yield of 1.3 per cent.
It carries low ongoing charges of just 0.54 per cent.
The trust is tipped toward industrials, at 39.6 per cent of AUM. Its top holding is precision instrumentation developer Spectris.
JP Morgan Smaller Cos IT
The £139.4m JP Morgan Smaller Cos IT has also beaten the average trust in seven out of 10 years, ranking it in the AIC’s top-20.
The trust is benchmarked against the FTSE Small Cap ex IT index, which it has outperformed in six of the last 10 years.
Manager Georgina Brittain has been running the trust since 1998. Over the last 10 years, she has returned 387.53 per cent, according to FE Analytics.
The trust is trading on the widest discount of any on this list, at 18.9 per cent. It has a dividend yield of 1.4 per cent and is geared at 6 per cent, according to the AIC.
It has ongoing charges of 1.21 per cent.
BlackRock Smaller Companies IT
The five crown-rated BlackRock Smaller Companies IT, headed up by Mike Prentis, has beaten the average investment trust in seven out of the last 10 years, and the Numis Smaller Companies + AIM ex IT index in seven of those.
It only lagged the index in 2007, 2009 and the down market of 2011.
The trust is the second best in terms of overall performance over the last decade, returning 538.88 per cent.
BlackRock Smaller Companies is trading on a discount of 13.6 per cent with 10 per cent gearing. It has a dividend yield of 1.6 per cent and ongoing charges of 1.2 per cent, excluding performance fee.
Invesco Perpetual UK Smaller Companies IT
Richard Smith and Jonathan Brown’s four crown-rated Invesco Perpetual UK Smaller Companies IT has beaten the average investment trust in seven years out of the last 10 and the Numis Smaller Companies ex Investment Companies index in six of these.
It has returned 363.54 per cent over the cumulative period.
It is trading on a discount of 13.3 per cent and has no gearing. It has the second highest dividend yield on this list, at 2.2 per cent.
The trust has ongoing charges of 0.9 per cent, but charges a performance fee.
The first article in the series looked at the most consistent Asia Pacific ex Japan trust of the last 10 years.